Dec 19, 2011

Anais Nin on failure and adversity

Life is truly known only to those who suffer, lose, endure adversity and stumble from defeat to defeat.

~ Anais Nin

Anais Nin on life

Life is a process of becoming, a combination of states we have to go through. Where people fail is that they wish to elect a state and remain in it. This is a kind of death.

~ Anais Nin

Anais Nin on death

I postpone death by living, by suffering, by error, by risking, by giving, by losing.

~ Anais Nin

Anais Nin on dreams

Dreams pass into the reality of action. From the actions stems the dream again; and this interdependence produces the highest form of living.

~ Anais Nin

Anais Nin on love and aging

Age does not protect you from love. But love, to some extent, protects you from age.

~ Anais Nin

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Anais Nin on friendship

What I cannot love, I overlook. Is that real friendship?

~ Anais Nin

Dec 15, 2011

Thomas Paine on politicians

The trade of governing has always been monopolized by the most ignorant and the most rascally individuals of mankind.

~ Thomas Paine

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Mencken on government

The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. And even if he is not romantic personally he is apt to spread discontent among those who are.

~ H.L. Mencken

Dec 12, 2011

CBS News president Richard Salant on the role of the mainstream media

Our job is to give people not what they want, but what we decide they ought to have.

~ CBS News president Richard Salant, 1961-64, 1966-79

Dec 4, 2011

Ludwig von Mises on civilization and cooperation

Civilization is a work of peaceful co-operation.

~ Ludwig von Mises, Socialism

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Ludwig von Mises on civilization

All the marvelous achievements of Western civilization are fruits grown on the tree of liberty.

~ Ludwig von Mises, The Theory of Money and Credit

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Ludwig von Mises on progress and risk taking

Every step of progress is a change involving heavy risks.

~ Ludwig von Mises, Bureaucracy

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Ludwig von Mises on progress

Men always strive for an improvement in their conditions and always will.  This is man's inescapable destiny.

~ Ludwig von Mises, Liberalism

Liberalism : In the Classical Tradition by Ludwig von Mises - Used (Acceptable) - 0930439236 by Cobden Press |

Ludwig von Mises on education and innovation

Innovators and creative geniuses cannot be reared in schools.  They are precisely the men who defy what the school has taught them.

~ Ludwig von Mises, Human Action

Ludwig von Mises on living standards and culture

A higher standard of living also brings about a higher standard of culture and civilization.

~ Ludwig von Mises, Economic Policy

Nov 21, 2011

Fred Hickey on QE3

Maybe I've spent too much time in the basement, but it can't be any clearer to me that we're seeing an almost exact replica of what occurred last year.  Last year Ben Bernanke and a "galaxy of Fed officials" fanned out to pave the way for the next round of QE.  This year they're doing the same thing.  Stocks soared for months before and for months after the implementation of QE2.  Now we're in the months leading up to the implementation of QE3 and the stock market has begun to soar again.  Yet there are a lot of stock market bears trying to short this market.  Look, I'd like to be bearish too, based upon the dismal economic fundamentals.  Unfortunately in this case, you can't fight the Fed.

~ Fred Hickey, The High-Tech Strategist, November 6, 2011

Nov 20, 2011

Václav Havel on hope

Hope is definitely not the same thing as optimism. It is not the conviction that something will turn out well, but the certainty that something makes sense, regardless of how it turns out.

~ Václav Havel

Nassim Taleb on science and business

In science, you need to understand the world; in business, you need others to misunderstand it.

~ Nassim Taleb, The Bed of Procrustes

Nov 19, 2011

Vice President Joe Biden on Jon Corzine

Jon Corzine helped craft the American Recovery and Reinvestment Act. When Barack Obama and I were sitting at a desk in a high rise in Chicago beginning to plan to get this economy out of a ditch the first guy I called was Jon Corzine. Not a joke, not a joke he is the smartest guy I know on finance and the economy. He was pushin when I was campaignin about the need for us to save or create jobs. And so if you need any evidence look at the recovery efforts of NJ and you can mirror them. They fall right on top of what we're doin so thank you Jon, thank you.

~ Vice-President Joe Biden on Jon Corzine

Nov 16, 2011

Surfer Garret McNamara on riding the worlds largest wave

I just didn't realize how big it was. So I started and I kept going down and down, and the drop seemed like forever, and I thought, wow. I started making the bottom turn, and felt the lip hit me. You can see it in the video. You see me look around twice, and then I get hit by the white water on the shoulder, and it feels like a ton of bricks, and I am thinking, I've gotta make this. I've seen waves rip guy's arms off, and I am thinking this thing could tear my head off.

Garrett McNamara, World Surfing Champion, November 8, 2011

Nov 3, 2011

Jamie Dimon speech at University of Washington

It’s okay for us at times to blame and be dissatisfied with others and hold them responsible, but it’s not okay to oversimplify and paint everyone with the same brush. It should not be acceptable to denigrate entire groups, not all companies, not all CEOs, not all politicians, not all media, not all students.

Jamie Dimon, CEO, JP Morgan Chase, Bloomberg, November 2, 2011

Nov 2, 2011

US Bancorp CEO Richard Davis on bank practices

Everybody’s breaking the rules, blah blah blah, Get over it.

Richard Davis, CEO US Bancorp, Minneapolis News, November 2, 2011

Bernanke on MF Global failure

It appears to be an idiosyncratic case. We are monitering the possible impacts on funding markets and elsewhere, and so far we have not seen any significant impact on financial stability.

Ben Bernanke, Federal Reserve Press Conference, 11/2/2011

Richard Cobden on free trade

I look farther; I see in the Free-trade principle that which shall act on the moral world as the principle of gravitation in the universe,—drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace.

~ Richard Cobden

Oct 25, 2011

Paul De Grauwe on Euro crisis

Everyone needs the ECB to step up to the plate. The ECB has no excuse not to act. In trying to keep its monetary virginity intact, the bank threatens to destroy the Euro Zone. If that happens, nobody will be able to profit from its virginity.

Paul De Grauwe, Financial Times, August 2011

Oct 21, 2011

Australian Prime Minister Julia Gillard on the global commodity boom

There's no advice to me that would cause me concern about Chinese demand collapsing.

~ Julia Gillard, Australian Prime Minister, "Unease in Australia," Bloomberg Markets, November 2011

Oct 10, 2011

Dan Pallotta on Steve Jobs and philanthropy

Last year wrote of Steve Jobs, "It's high time the minimalist CEO became a magnanimous philanthropist."

I've got news for you. He has been. What's important is how we use our time on this earth, not how conspicuously we give our money away. What's important is the energy and courage we are willing to expend reversing entropy, battling cynicism, suffering and challenging mediocre minds, staring down those who would trample our dreams, taking a stand for magic, and advancing the potential of the human race.

On these scores, the world has no greater philanthropist than Steve Jobs. If ever a man contributed to humanity, here he is. And he has done it while battling cancer.

~ Dan Pallotta, "Steve Jobs, World's Greatest Philanthropist," Harvard Business Review, September 2, 2011

Sep 29, 2011

Hugh Johnson: "You just can’t make the case for a bear market and a recession"

The economic numbers have been anemic but not negative, you just can’t make the case for a bear market and a recession... This may turn out to be a correction, although a severe one, in an ongoing bull market, accompanied by a soft patch in the economy.

~ Hugh Johnson, chairman of Hugh Johnson Advisors, "U.S. stocks erase gains; money moves to defense,", September 29, 2011

Sep 28, 2011

Mark Hulbert on bullish parallels to 1930s stock market

I admit that I’m not an expert in the analogy-drawing department, but that rally that began in late 1929 does not appear to be very analogous.

Another rally that is perhaps more comparable is the one that began in July 1932. It lasted nearly five years, and during it the Dow more than quadrupled.

The accompanying chart superimposes on that mid-1930s rally the Dow’s progress from the March 9, 2009, low until now. Within the acceptable tolerances of analogy-drawing, I’d say the market over the last two and one-half years is not that far off.

And, if this is the script the market is indeed playing out, a huge rally is in store over the next couple of years.

Is this analogy-drawing little more than shameless data mining? Probably not. I engage in it for this column simply to counter those who, equally shamelessly, try drawing their own analogies to the 1930s in order to reach bearish conclusions.

From a contrarian perspective, however, the analogies to that decade that the bears love to draw do have significance. It indicates just how robust is the wall of worry that advisers choose to draw an analogy to the very worst of the 1930s — when they just as easily could do so in another way and reach a quite bullish conclusion.

And, as we all know, bull markets like to climb a wall of worry.

~ Mark Hulbert, "Is stock market replaying decade of the 1930s?,", September 23, 2011

Sep 7, 2011

Robert Wenzel on Nouriel Roubini, central bank propagandist

Nouriel Roubini is either ignorant of financial history, or attempting to keep the populace ignorant. Roubini should stop tweeting on history until he is willing to tweet the facts. The rest of us should continue to study history so that we will be aware when central bank propagandists are attempting to distort history in front of our very own eyes.

~ Robert Wenzel, "Roubini's Off the Wall History of Financial Crashes," Economic Policy Journal, August 21, 2011

Thomas Sowell on the price system

Prices are important not because money is considered paramount but because prices are a fast and effective conveyor of information through a vast society in which fragmented knowledge must be coordinated.

~ Thomas Sowell

Sep 5, 2011

Marc Benioff compares legacy enterprise companies to Arab dictators

In the Arab revolution] you didn't see signs saying 'Thank you Microsoft.' You didn't see signs saying 'thank you IBM.' ... We've seen Mubarak fall, Qaddafi fall. Not so long from now we'll hear about a corporate spring, an enterprise spring. When will the first corporate CEO fall for the same reason -- because customers are rising up, they're not listening to their employees, they're not paying attention.

~Marc Benioff, CEO,, speech delivered at's "Dreamforce" conference, August 31, 2011

Aug 30, 2011

France bans short selling

Investors wanted to test French resistance. This is our response, as always very determined, and it will be so for all those who want to put us to the test.

"Jean-Pierre Jouyet, Head of the AMF (French Securities Regulator), August 23, 2011

Aug 29, 2011

Seth Klarman on lessons learned from the 2008 crisis

Most of us learned about the Great Depression from our parents or grandparents who developed a “Depressionmentality,” by which for decades people shunned leverage, embraced thrift, and thought twice before quitting their secure jobs to join risky ventures. By bailing out the economy rather than allowing the pain of the economic and market collapses to be felt, the government has endowed our generation with a “really-bad-couple-of-weeks-mentality”: no lasting lessons are learned; the government endlessly intervenes in the economy, and, ironically, the first thing to strongly rebound from the 2008 collapse isn’t jobs or economic activity but speculation.

Benjamin Graham’s margin-of-safety concept – to invest at a sufficient discount so that even bad luck or the vicissitudes of the business cycle won’t derail an investment – is applicable to the economy as a whole. Bridges intended for ten-ton trucks are overbuilt by engineers to hold vehicles of 30 tons. Responsible investors assume their best judgments will sometimes go awry and insist on bargain purchases that allow room for error. Likewise, an economy built with no margin of safety will eventually implode. Governments that run huge deficits, promise entitlements that will be next-to impossible to deliver, and depend on the beneficence of foreigners to stay afloat inevitably must collapse – perhaps not imminently but eventually, as Greece and Ireland have recently discovered.

It is clear, both in the financial markets and in government policy, that no long-term lessons have been drawn from the events of 2008. A friend recently posited that adversity is valuable not for what it teaches but for what it reveals. The current episode of financial adversity reveals some unpleasant truths about the character and will of our country and its leaders, and offers an unpleasant picture of the future that awaits, unless we quickly find a way to change course.

~Seth Klarman, founder, Baupost Group, investor letter, 2010

Aug 27, 2011

Gus Faucher (Moody's economist) on a possible double-dip recession

If there is another recession, I think it wouldn't be as severe and it would also be shorter. And the reason for that is a lot of the imbalances that drove the previous recession have been corrected.

~ Gus Faucher, senior economist at Moody's Analytics, "2 Ways the Next Recession Will Be Different," Yahoo! Finance, August 24, 2011

Gene Epstein on the odds of recession

I would put the danger of recession at 30% - bad enough, but it still means 70% against. A 30% risk is also still the reading on the Credit Suisse model, reported over the past two weeks, about the chances of recession over the next six months.

~ Gene Epstein, "Rejecting the R-Word," Barron's, August 29, 2011

Aug 25, 2011

Warren Buffett on his $5B investment in BAC

Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it. I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them.

~Warren Buffett, chairman and CEO, Berkshire Hathaway, August 25, 2011

(Under the terms of the deal, Berkshire will get 50,000 preferred shares that carry a dividend of 6% a year and are redeemable at a 5% premium, along with warrants to purchase 700 million Bank of America shares at an exercise price of $7.14 each. The warrants may be exercised in whole or in part in the 10 years following the closing of the deal.)

BAC CEO on Warren Buffett's $5B investment

I remain confident that we have the capital and liquidity we need to run our business. At the same time, I also recognize that a large investment by Warren Buffett is a strong endorsement in our vision and our strategy.

~Brian Moynihan, CEO, Bank of America, August 25, 2011

Aug 23, 2011

Alan Greenspan on how he used 'Fedspeak' in Congressional hearings

I would engage in some form of "syntax destruction", which sounded as though I were answering the question but in fact, had not.

~Alan Greenspan, former chairman, Federal Reserve, CBS "60 Minutes" interview, September 16, 2007

Aug 18, 2011

Chavez emptying Bank of England vault

We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home. It’s a healthy decision.

If there isn’t enough room to store the gold in the central bank vaults I can lend you the basement of the Miraflores presidential palace.

~ Venezuelan President Hugo Chavez, "Chavez emptying Bank of England vault", Bloomberg, August 17, 2011

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Jack Ablin on economic life without the Fed

Every time the economy got the sniffles, we had the Federal Reserve standing by with tissues. This time around, I think the box is empty, and we're going to have to go through this alone. I think we can do it. It's just not something we're accustomed to.

~ Jack Ablin, chief investment officer at Harris Private Bank, "Here we go again: Stocks plunge on economic fear," Associated Press, August 18, 2011

Leon Cooperman: "ZIRP will work"

Ultimately, the policy of zero percent interest rates by the Fed will work.

We're overweight energy and the economy is slower, but we are not going into a recession.

~ Leon Cooperman, as appeared on CNBC, August 18, 2011

Aug 17, 2011

Peter Thiel on the advantage in dreaming the impossible

There are quite a lot of people who think it's not possible. That's a good thing. We don't need to really worry about those people very much, because since they don't think it's possible they won't take us very seriously. And they will not actually try to stop us until it's too late.

~ Peter Thiel, co-founder, PayPal, Seasteading Institute Conference, 2009

Bill Laggner on sovereign debt

The market is saying, get together and impair the stock and bondholders and come up with a restructuring that makes sense. But the pain would be so extreme, mainly for the bankers, that they don't want to do it and the political class doesn't want to make them do it.

"Europe didn't dodge judgement day",, June 30, 2011

Bill Laggner on US downgrade

We're the best house in a bad neighborhood, even though nobody has walked inside to notice the small grease fire in the kitchen.

"US downgrade a crossroads for S&P",, August 6, 2011

Wall Street analysts suddenly worried about bubbles-- in gold

[Speculative demand from investors has pushed the gold market into a] bubble that is poised to burst. We have seen the economic damage [of past bubbles and] feel compelled to ring the warning bells. There could be substantial risk to gold once the fear that the world is coming to an end subsides. We are worried about the downward risk.

~Dean Junkans, analyst, Wells Fargo, research report, August 15, 2011

Aug 16, 2011

Heroic Hugh Hendry on politicians vs. hedge fund managers

The reality is that global macro managers like myself have been thinking about these issues and have been articulating our great fears not for 10 weeks, but for 10 years. And therefore, I'd say to the politicians, we're smarter. We actually know what their next step is before they know it.

~Hugh Hendry, CIO, Eclectica Asset Management, GAIM International conference, June 2010

Aug 15, 2011

Moody's macroeconomist says "confidence is key"

The economy could go either way, and at these kinds of turning points, confidence is key. It’s the administration’s hope that if the president is out there, talking up the economy, it will prevent a downturn.

~Gus Faucher, director of macroeconomics, Moody’s Analytics,, August 15, 2011

Obama says Congress causes unemployment

There is no shortage of ideas to put people to work right now. What is needed is action on the part of Congress.

~Barack Obama, president, United States of America, speech given at Cannon Falls, Minnesota, August 15, 2011

Aug 12, 2011

Warren Buffett on the rating of the dollar vs. US Treasuries

U.S. Treasuries are still triple-A in that there is no question that we will repay the interest and the principal. Every contract will be repaid. So our bonds are triple-A. Our currency, the dollar, is not triple-A. Our bonds are.

~Warren Buffett, the Oracle of Omaha, Fortune, "Buffet: The lower stocks go, the more I buy", August 11, 2011

Aug 11, 2011

Peter Yastrow: "Fed is not Houdini"

The people at the Fed are not Harry Houdini. All they can do is buy time.

~ Peter Yastrow, market strategist, MF Global Ltd., August 11, 2011, as appeared on CNBC's Squawk Box

Aug 10, 2011

Jamie Dimon on US fiscal discipline and policy coordination

The United States needs to show fiscal discipline. We need to show it for ourselves, not because of China, not because of S&P. I’m hopeful we can show that soon.

I want to see America grow again. We need a little bit of coherent, consistent, coordinated policy.

If you know me at all, I am not suited for politics. Anyone who runs a company and gets out in the field would say the same things I do.

~Jamie Dimon, CEO, JP Morgan, CNBC, August 10, 2011

Jamie Dimon says JPM has manageable exposure to Euro banks

We’ve been in Europe for hundreds of years. We have manageable exposures to all the banks. We’re not going to cut and run.

~Jamie Dimon, CEO, JP Morgan, CNBC, August 10, 2011

Jamie Dimon on Meredith Whitney's muni bond armageddon call

I love Meredith and all that but, honestly, most of that stuff is hogwash.

~Jamie Dimon, CEO, JP Morgan, CNBC, August 10, 2011

Aug 9, 2011

Barton Biggs bails out in August 2011

I've taken some risk off, and I hate to do it, I think it's probably the wrong thing to be doing, but I'm a fiduciary to a certain extent, and I've got to protect my capital.

I don't understand now what's going on. I suspect that we're now into a high-frequency trading, momentum-driven cascading downturn. And I want to get out of the way of it.

~Barton Biggs, managing partner and co-founder, Traxis Partners, Bloomberg TV, August 8, 2011

Aug 8, 2011

JPMorgan economist says Fed can boost confidence, not the economy

Those steps are all about bolstering confidence. It wouldn’t do tons to alter economic and financial conditions, but the perception that the Fed will act and do something is reassuring.

~ Michael Feroli, chief U.S. economist and former Fed economist, JPMorgan Chase in New York,, August 8, 2011

Alan Greenspan on why US Treasury Bonds are still safe

This is not an issue of credit rating. The United States can pay any debt it has because we can always print money to do that. So, there is zero probability of default.

~ Alan Greenspan, "the Maestro" and former chairman, Federal Reserve, MSNBC's Meet the Press, August 7, 2011

Aug 7, 2011

Bill Laggner on the S&P downgrade of US treasuries

We're the best house in a bad neighborhood, even though nobody has walked inside to notice the small grease fire in the kitchen.

"US downgrade a crossroad for S&P",, August 6, 2011

Aug 6, 2011

Warren Buffett says US debt deserves "quadruple A" rating

[The U.S., which was cut Aug. 5 to AA+ from AAA at S&P, merits a] quadruple A [rating].

~Warren Buffett, chairman, Berkshire Hathaway, Bloomberg TV, August 5, 2011

Warren Buffett has "confidence" in no double dip in 2011

Financial markets create their own dynamics, but I don’t think we’re facing a double dip recession. Clearly what stock markets do have is an effect on confidence, and this selloff can create a lack of confidence.

~Warren Buffett, chairman, Berkshire Hathaway, Bloomberg TV, August 5, 2011

Bearing on shorting Goldman Sachs

Goldman is nothing more than a glorified hedge fund taking massive bets with taxpayer subsidies. As more market participants realize this conflict of interest the business should contract rapidly.

"Bearing on shorting Goldman Sachs", Business Insider, Augest 20, 2010

Aug 5, 2011

HSBC economist looking for growth in second half of 2011

Our economists are not forecasting a recession and, indeed, are looking for U.S. growth to accelerate in the second half. Investors should look to raise equity risk gradually over the summer.

~Garry Evans, global head of equity strategy, HSBC in Hong Kong, "Strategists Sticking With 17% S&P 500 Rally by Year-End on Rising Profits",, August 5, 2011

UBS economist says don't overreact, market resilient

I’m reluctant to overreact to some shorter-term weakness, no matter how real it is, because the market has proven to be unbelievably resilient. If you would have been acting that way for the last two years, you would have gotten killed by this market.

~Jonathan Golub, chief U.S. market strategist, UBS in New York, "Strategists Sticking With 17% S&P 500 Rally by Year-End on Rising Profits",, August 5, 2011

Tech investor Marc Andressen is an elitist

Any time you stand in line at the D.M.V. and look around, you’re like, Oh, my God, I wish all these people were replaced by computer drivers. Ten to 20 years out, driving your car will be viewed as equivalently immoral as smoking cigarettes around other people is today.

~Marc Andreessen, venture capitalist, New York Times interview, July 7, 2011

Aug 4, 2011

Barton Biggs is kept up all night worrying about nuclear explosions on Long Island

Yeah, sure, I'm worried about a double-dip. But I'm worried about a nuclear explosion on Long Island, too. You know, there's all kinds of things to be worried about.

~Barton Biggs, founder, Traxis Partners, Bloomberg TV, August 4, 2011

Barton Biggs on buying opportunities

I see all kinds of buying opportunities. The problem is, I already own part of them.

After getting banged in the face yesterday I'm not too inclined to step in there again... yet.

~Barton Biggs, founder, Traxis Partners, Bloomberg TV, August 4, 2011

(The anchorwoman reported prior to asking Barton Biggs about buying opportunities that he was 50% net long going into the August 4th meltdown and he said he wished he had been about 10-20% net long instead.)

Barton Biggs on saving the euro

It's clear that the Europeans didn't put together a big enough package to solve the problem and now, since they didn't do that, they're going to have to do a much bigger package and maybe even do fiscalization [sic]  of Europe to save the euro.

~Barton Biggs, founder, Traxis Partners, Bloomberg TV, August 4, 2011

Barton Biggs on the reason for the big August selloff

There's no question that the original reason was the lack of confidence in the authorities, in other words, the politicians and their ability to deal with this thing. The Europeans did not do a big enough package to solve their sovereign debt issue  and we have had this and we [the US] had this really half-assed compromise where we didn't really deal with the entitlements issue. So, there's been a loss of confidence but I am astounded at how severe the reaction has been.

~Barton Biggs, founder, Traxis Partners, Bloomberg TV, August 4, 2011

Aug 2, 2011

Birinyi still bullish after market swoon

It’s like all these times when you second-guess yourself, and you probably wake up a little earlier than you’re used to, and maybe you put an extra finger of scotch in the glass. It’s probably a good idea to have a gut check once in a while, because it makes you review and rethink your process. Our view is that this is still a market of some duration.

~Laszlo Birinyi, president, Birinyi Associates,, August 2, 2011

BNP Paribas CEO comments on quarter and EU

This is exactly (Net income 2.13 billion euros vs 2.11 billion euros a year ago) the conservative and sound provisioning that you would expect BNP Paribas to provide for.

Everyone who bets against Greece or against the euro zone, I hope they lose.

BNP Paribas CEO Baudouin Prot, Bloomberg TV, August 2, 2011

Jul 25, 2011

Joe Granville on the expected soft landing (2000)

I am pretty certain that Alan Greenspan would never have agreed to another four-year term if he feared a stock market collapse during his tenure. At least over the next nine months we can relax and expect a soft landing and no recession. Bad news will be out and good news will be in.

~ Joe Granville, The Granville Market Letter, July 13, 2000

(Source: Barron's, July 24, 2000, p. 33)

Kurt Richebacher on the expected soft landing (2000)

Adhering to the famous postulate of Austrian theory that the length and severity of recessions or depressions depend critically on the magnitude of the dislocations and imbalances that have accumulated in the economy during the preceding boom, we take it for granted that a hard, even a very hard, landing is absolutely inevitable for the U.S. economy.

~ Kurt Richebacher, The Richebacher Letter, July, 2000

(Source: Barron's, July 24, 2000, p. 33)

Doug MacKay on investing in dot-com equipment providers (2000)

I guess if I had been in business in northern California during the 1860s, I would have been selling pots and pans and digging tools, rather than panning for gold.

We didn't want to worry about which of the dot.coms would strike gold. But we were sure that their suppliers like Cisco, Sun and Juniper would prosper.

~ Doug MacKay, co-manager of $1.46 billion Red Oak Technology Select Stock Fund, "Cornerstones; Doug MacKay likes brick-and-mortar companies, New Economy style," Barron's, August 14, 2000

(Red Oak Technology Select lost 90% of its value over the ensuing two years. MacKay is no longer at the helm and assets were $69 million as of June 30, 2011.)

Jul 20, 2011

Warren Buffett on the debt ceiling

It doesn't really make any sense. The way to limit debt is to take in revenues in relation to your expenditures, and to have this artificial limit, which always gets raised in the end, disrupt the activities in an important way in Congress periodically, is a waste of Congress's time.

~Warren Buffett, the Oracle of Omaha, CNBC interview, July 18, 2011

Larry Summers on how to save the eurozone

US policymakers were applauded for about 12 hours for their willingness to let Lehman go bankrupt. The adverse consequences of the shattering effect that had on confidence are still being felt now. The European Central Bank is right in its concern that punishing creditors for the sake of teaching lessons or building political support is reckless in a system that depends on confidence.

There must be a clear commitment that, whatever else happens, no big financial institution in any country will be allowed to fail. The most serious financial breakdowns – in Indonesia in 1997, Russia in 1998, and the US in 2008 – came when authorities allowed doubt over the basic functioning of the financial system. This responsibility should rest with the ECB, with the requisite political support.

~Larry Summers, former US Treasury Secretary and former Director of the National Economic Council, "How to Save the Eurozone", Financial Times, July 18, 2011

Jul 17, 2011

Ludwig Lachmann on the economic function of the entrepreneur

We are living in a world of unexpected change; hence capital combinations . . . will be ever changing, will be dissolved and reformed. In this activity, we find the real function of the entrepreneur.

~Ludwig Lachmann, German-born Austrian economist, 1956

Ludwig von Mises on entrepreneurs as visionaries

What distinguishes the successful entrepreneur and promoter from other people is precisely the fact that he does not let himself be guided by what was and is, but arranges his affairs on the ground of his opinion about the future. He sees the past and the present as other people do; but he judges the future in a different way.

~Ludwig von Mises, Austrian economist, Human Action, p. 585, 1949

Ludwig von Mises on how to tell an entrepreneur from a non-entrepreneur

There is a simple rule of thumb to tell entrepreneurs from non-entrepreneurs. The entrepreneurs are those on whom the incidence of losses on the capital employed falls.

~Ludwig von Mises, Austrian economist, 1951

Jul 15, 2011

Ben Bernanke on the consequences of a US debt default

It would be a calamitous outcome. It would create a very severe financial shock that would have effects not only on the U.S. economy, but the global economy.

~Ben S. Bernanke, chairman, Federal Reserve, Congressional testimony to the Senate Banking Committee, July 14, 2011

Bernanke on the effect of budget cuts on the US recovery

I only ask ... as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery.

~Ben S. Bernanke, chairman, Federal Reserve, Congressional testimony to the Senate Banking Committee, July 14, 2011

Jul 14, 2011

Alan Greenspan on the Bush tax cuts

I was in favor of the Bush tax cuts. on the grounds that it was the dissipation of a surplus. As soon as it became obvious that the surplus disappeared, I no longer supported that. My view about taxes is I would like them as low as possible but not with borrowed money.

~Alan Greenspan, former chairman, Federal Reserve, CNBC interview, June 30, 2011

Alan Greenspan on the return of the Greek drachma

A greek default is inevitable. If there is not fiscal consolidation, I cannot see any credible scenario where the Greek drachma does not come back.

~Alan Greenspan, former chairman, Federal Reserve, CNBC interview, June 30, 2011

Alan Greenspan on the inevitability of a Greek default

There's only two possible givens: there's a Greek default or there is a fiscal consolidation of the 17 countries of the Euro Zone.

I find that unlikely except for the fact that Germany is so key to that decision. Germany's caught up in a very critical political dilemma. If they were to stop and stop supporting Greece and Greece went under, what would very likely happen, we'd get some dismantling of the euro. What the Germans are resting on is a very strong export market, the result of the fact that the euro, relative to euro, relative to the eollar, is lower.

If, however, Germany goes back to the Deutschmark, which almost surely would be worth 20% more than the euro, they would have a huge capital gain. Remember, their liabilities would be much lower, but the very high Deutschmark would mean their exports would be under severe contraction. They have this short term problem of "how do we keep exports going, employment good?" Remember, they're doing very well, a very large part of that is they are supporting the transfer of a very large amounts of money.

That keeps the euro in place. It also keeps exports, as a critical variable.

~Alan Greenspan, former chairman, Federal Reserve, CNBC interview, June 30, 2011

Alan Greenspan says the motor of the US economy is Greece

It's very evident to anybody that looks at the data the major force driving our economy indirectly through the financial markets is Greece. As the Greek default goes up in probability, we run into all sorts of problems. largely, not because the United States has a lot of Greek debt. As you know, it doesn't. It's essentially that we have very large commitments in Europe and Europe is critical to not only holding the Greek debt, but I might add, also where I think approximately half the foreign affiliate earnings are generated.

So if Europe runs into trouble because of Greece, it's going hit us two ways. One, the basic commitment that we have to Europe and the usual financial flows, but in addition, it's going to affect the whole structure of profitability in the United States. Because we can't afford a [mumbled] and foreign affiliate earnings in Europe coming down significantly.

~Alan Greenspan, former chairman, Federal Reserve, CNBC interview, June 30, 2011

Alan Greenspan on the real reason the stock market has risen since 2009

There is an alternate explanation for the rise in the stock market, particularly since early 2009 and that is the  extraordinary increase in productivity in non-financial corporations. Not only labor productivity but productivity in energy, in the use of materials, and a number of other things. And if you construct that into a profit margin indicator, it directly causes a major rise in profit margins, a major rise in earnings, which we've seen. But, because of the so-called equity premium, the price people have to pay for stocks, or, I should say, that issuers have to pay for stocks, in order to get money relative to bonds, that is at the highest level in 50 years.

So, you have earnings pushing up against the structure of a very immobile equity premium and algebraically, the relationship of those two, is the stock price.

~Alan Greenspan, former chairman, Federal Reserve, CNBC interview, June 30, 2011

Chinese rating agency chairman on the creditworthiness of the US govt

Whether the U.S Congress approves the deal to raise the country's debt ceiling or not, it can't improve the repayment ability of the U.S. [The U.S. government is] issuing new debt to repay old debt.

~Guan Jianzhong, chairman, Dagong Global Credit Rating Co., company report, July 14, 2011

Ben Bernanke on the possibility of QE3 in 2011

We are uncertain about the near-term developments in the economy. We’d like to see if, in fact, the economy does pick up, as we are projecting.

~Ben S. Bernanke, chairman, Federal Reserve, Congressional testimony, July 14, 2011

Ben Bernanke on possible US debt default

I think that there is not really any solution other than to find a way to solve these problems, to address the fiscal issues and to raise the debt limit at the appropriate time.

Ben S. Bernanke, chairman, Federal Reserve, July 14, 2011

Harry Reid on the consequences of a US debt default

[If the U.S. defaults] a massive financial disaster will sweep the world in a global depression.

~Harry Reid, US Congressional representative from Nevada, July 14, 2011

Jamie Dimon on US debt default

It's imperative that that debt ceiling be fixed and it's imperative the United States shows fiscal discipline. They're both important not just for the health of the United States, but the financial health of the world.

No one, no one can tell me with certainty that default wouldn't cause catastrophe. Therefore it's irresponsible to take that chance. It's not possible that someone can say with a straight face that the default of the United States wouldn't damage the United States and the global economy. Why take that chance? I would never take that chance.

Jamie Dimon, chairman and CEO, JP Morgan Chase, 2nd Quarter 2011 conference call, July 14, 2011

Ben Bernanke on whether gold is money

Ron Paul: Do you believe that gold is money?

Bernanke: No.

Ron Paul: Why do central banks hold gold?

Bernanke: It is an asset, like Treasuries. They're not money.

Ron Paul: Why hold gold, and not diamonds?

Bernanke: Oh, tradition, I suppose.

~ Ben S. Bernanke, chairman, Federal Reserve, in Congressional testimony with Rep. Ron Paul, July 13, 2011

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Jul 12, 2011

Buffett on the wisdom of Keynes

I especially recommend Keynes' essays on persuasion. Reading Keynes will make you smarter about securities and markets. I'm not sure reading most economists would do the same.

~Warren Buffett, the Oracle of Omaha, Outstanding Investor Digest, June 23, 1989

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Jul 7, 2011

What Laszlo Birinyi worries about (aka, nothing)

What I worry about is what the market worries about. Right now the market, if you look at the breadth, if you look at the volume you saw the last couple of weeks, you look at these things, the market doesn't seem to be terribly concerned.

I've always argued, and you've heard me say this many times [Maria Bartiromo], that the negative case is always more articulate, it's always more intelligent, it's always more compelling because it looks at the now. The market, meanwhile, looks ahead. So, we don't know what the market is looking for and I could come up with all kinds of potential disasters but looking at the market, the market doesn't seem to be saying anything is going to happen.

~Laszlo Birinyi, president, Birinyi Associates, CNBC, July 6, 2011

Laszlo Birinyi says this is a bull market and to expect surprises

We're in a bull market. I think the most important part of a bull market is perception. Right now, sentiment is positive and I think we're overstating the negatives with regard to the economy. We're surprised at how many good things are happening in the economy. If you look at it from bottoms-up and not these overall surveys, these overall views, these overall indicators, if you look at individual industries and these other secondary indicators there will be some potential surprises for the economy.

~Laszlo Birinyi, president, Birinyi Associates, CNBC, July 6, 2011

Ken Fisher on "bounce back" investing

One of the points is that the stocks that have been getting hammered the most are actually the same categories that were doing well as the market was going up, which is really normal for a correction. They are the ones the most economically sensitive and therefore I think the bounce back where you want to focus now is on the things that are economically sensitive including energy and materials and industrials and consumer discretionary as you have shown on your chart earlier as to the areas that have done best in the expansion. I think those areas bounce back, because as we move from a period in a normal expansion of below average growth back to more normal growth, those stocks will get more bounce back and more empathy behind them, if you will.

~Ken Fisher, CEO, Fisher Investments, CNBC, June 22, 2011

Laszlo Birinyi says we've seen this before in a bull market

I think we're in a long term bull market. and just as we always do, we have these periods where we slow down and stop.

~Laszlo Birinyi, president, Birinyi Associates, CNBC, June 22, 2011

Ken Fisher shows his macro blind spots, says look to the emerging market stars in 2011

My view is you should always think globally first and think America second. You look around the world, emerging market companies are what are cumulatively doing better than America's economy, growing pretty darned nicely. While there is some global slowdown, there's not the slowdown we see focused on America. In every economic expansion some countries lead and some lag. Right now, we're in the middle of the pack, not the leaders or laggards. we're so used to being the leaders, we have a hard time with it.

~Ken Fisher, CEO, Fisher Investments, CNBC, June 22, 2011

Ken Fisher tunes out Bernanke, tempers his 2011 forecast

First, whenever I feel the urge to pay attention to Mr. Bernanke, I watch reruns of the Beverly Hillbillies instead. Second, in every economic expansion in our lifetimes, and before, the rate of GDP growth has been variable and there have always been quarters the GDP growth rate slowed down sometimes, in fact single quarters of negative GDP growth within economic expansions. This period is not very abnormal. Mind you, I'm not terribly bullish for this year. My view of this year has been single digit positive returns and much more of a picker's year than big broad theme year. I'm not terribly wildly optimistic and try to do the best I can to think about Mr. Bernanke the way Milton Friedman would have written about him-- we would do better if we would do less.

~Ken Fisher, CEO, Fisher Investments, CNBC, June 22, 2011

Warren Buffett on how to deal with the public debt

I would go after the very rich.

~ Warren Buffett, interview with Becky Quick in Sun Valley, Idaho, CNBC, July 7, 2011

Jul 6, 2011

Jim Grant on the state of the US dollar since 1971

Since 1971, the dollar has been a derivative without an underlying asset.

~Jim Grant, publisher, Grant's Interest Rate Observer, GIRO, May 20, 2011

GaveKal MD unwittingly makes the case for avoiding Chinese financial system at all costs

[In a market system, with independent shareholders and more or less alert debt-rating agencies, the Chinese banks wouldn't last "five minutes".]

But because it's a closed system, they can last indefinitely, because it's in no one's interest to pull the trigger on these institutions and force them to do an instant mark-to-market.

This is a perfectly rational way to organize a financial system at China's level of development. Don't take the metrics and standards that are devised for a mature financial system and impose them on China. If you do, you come to the conclusion that it should fall apart tomorrow. But, by the same standard, the system should have collapsed 25 years ago.

~ Arthur Kroeber, managing director, GaveKal-Dragonomics, interview, Grant's Interest Rate Observer, May 20, 2011

Jim Chanos compares Chinese LGFV's to US subprime

China apparently can't hide its LGFV [local government funding vehicles] problem any more. The fact that these LGFV loans are already going bad in a 'booming' economy makes them analogous to our subprime mortgages in late 2006, only worse.

At Rmb 9 trillion at the end of 2010, LGFV loans equaled 30% of China's GDP. In early 2007, U.S. subprime mortgage debt totaled $1.3 trillion, or 8% to 9% of U.S. GDP. In fact, the Rmb 2 trillion to Rmb 3 trillion that's already been identified as needing to be restructured is close to the U.S.' entire subprime exposure, realtive to GDP.

~ Jim Chanos, founder, Kynikos Associates, May 31st, 2011

Kevin Duffy on the legacy of QE2

Seduce savers into risk assets. Replace savings with speculation. Help foment bubbles in everything from silver and cotton to Chinese dot-coms and social networking IPOs. Add another round of moral hazard. Add price inflation to the woes of the middle class. Have zero effect on housing and employment. Bring unfounded confidence back to the corporate sector (witness massive stock buybacks). Further engorge the public (parasitic) sector at the expense of the private (productive) sector. Enable the public debt to go parabolic, putting it on credit watch and raising longer-term rates. Set an example to the rest of the world that they can paper over their problems, putting off the day of reckoning another day.

… All in all a raging success!

~ Kevin Duffy, July 5, 2011