The Mess That Greenspan Made - Part 415

Investor Optimism Plunged Last Month

If yesterday’s big rally did signal that markets have put in their lows for the year, someone should tell retail investors to get on board because, according to this Gallup poll , they were pretty shaken up last month, investor confidence plunging to early-2009 levels.

It should come as no surprise that two-thirds of the survey respondents said they feel “little or no control in their efforts to build and maintain their retirement savings in the current environment”, but Fed Chief Ben Bernanke’s low interest rates have forced many of them to hold their nose and stay in the market in hopes of higher returns.

The potential good news here is that confidence last reached current levels in February 2009 just before one of the biggest stock market rallies in history that began in March.

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Tuesday Morning Links

Iceberg spotted, summit convened – Economist
Trichet Sees Risk as Greek Writedowns Split EU – Bloomberg
Slovakia PM links EU bailout vote to government survival – Washington Post
China sees trade war if U.S. passes currency bill – CNN/Money
China faces US punishment for “controlling yuan” – Channel News Asia
Debt committee could raise risk of U.S. downgrade – CNN/Money
Goldman Sachs may post third-quarter loss: Citi – Reuters
Amid Protests, Blankfein Cancels College Talk – DealBook
Listen to the Occupy Wall Street Movement – HuffPost
Occupy Wall Street Protests Rankle the Rich – ABC News
5 myths of Occupy Wall Street – Weidner, MarketWatch
Why Not to Scorn Occupy Wall Street – The Freeman

Oil below $85 amid hope for EU debt crisis plan – AP
Gold eases after ECB comments, trade volatile – Reuters
Currency Forecasters Say Best Over for Dollar – Bloomberg
Are institutional investors joining the rally? – MarketWatch
Stocks May Have Seen Their Lows For The Year – CNBC
Why Jim Rogers is right about commodities – MarketWatch
Politicians, Regulators, Banking Officials and Gold – Mineweb
Scoach OKs first gold currency derivative trading – Reuters
China installs gold vending machine, plans 2,000 more – Mineweb
Gold Can’t Be a Risk Asset for Long – WSJ

Keynes and Hayek, the Great Debate (Part 4) – Bloomberg
Roubini: Double-Dip Recession a Foregone Conclusion – CNBC
Millions to lose jobless benefits if Congress doesn’t act – CNN/Money
Alberta jobs-increase figures are “stunning” – MarketWatch
ECB Backs Bond Guarantees to Magnify Bailout Fund – Bloomberg
Greece’s woes: Debts, downturns and demonstrations – Economist
China Record Boosts Confidence This Is No Bubble – Bloomberg
Survey Finds a Gloomy Outlook on Home Prices – WSJ
Where To Find Housing Demand – CNBC
Greenspan – Burn the Homes Down = Low Cost Strategy – 4closurefraud
The mystery of US banks’ second mortgage exposure – FT Alphaville
Too Early to Sound the All Clear? – Fed Watch


Occupy Main Street

The odds of a government sponsored principal writedown program seem to be increasing by the day, aided by the attention now being focused on the big banks by Occupy Wall Street. If homeowners don’t get their bailout, we’ll be seeing a lot more of this as there are still more than a million homes either already in foreclosure or headed that way.

From the Nick Anderson archive at the Houston Chronicle.

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Another Bad Month for John Paulson

Wall Street’s wunderkind over the last few years, famed billionaire hedge fund manager John Paulson, just seems to keep running into bad luck (or maybe it’s just the results of bad decisions) and disgruntled investors seem to just keep telling the New York Times about it. This report in DealBook provides some of the details:

Tired of incessant leaks to the media about its poor performance, Paulson & Company, the hedge fund started by the billionaire John A. Paulson, decided a few weeks ago to amend its reporting policies to make it harder to obtain performance data.

But the changes failed to obscure this painful fact: one of his largest funds is down 47 percent through September, a loss that would require returns of almost 100 percent to surmount, according to investors in the fund. The nonleveraged version of the same fund is down about 32 percent, according to the investors.

Other funds that were doing fine earlier this year are now also taking a nosedive, including Mr. Paulson’s gold fund ( up 1 percent for the year after falling 16 percent last month), which placed bets on various assets linked to gold, as well as his Recovery fund (down 31 percent for the year), which placed a bet on the recovery of the United States economy. Both funds were hit with double digits losses in September after gold prices fell and stock market volatility continued.

The reporting changes included not allowing investors who don’t own a particular Paulson fund to see the performance of that fund and other similar moves to reduce how much performance data is disseminated to those who really don’t need to see it. All this comes after the big $500 billion loss on a Chinese timber company earlier in the year and an optimistic view of the U.S. banking sector that, so far, has proven to be off the mark.

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Alan Grayson on Occupy Wall Street

The Sunday political shows were jam-packed with talking heads talking about Occupy Wall Street and earlier, on Friday, former U.S. Representative from Florida Alan Grayson appeared on the Bill Maher show to succinctly explain what it is they’re complaining about.

Greyson says, “They’re upset about the fact that Wall Street has iron control over the economic policies of this country and that one party is a wholly owned subsidiary of Wall Street and the other party caters to them as well.” Well put.

Also see this clip of Fox News’ Heraldo Rivera attempting to broadcast from the protest site.

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