Chuck Prince – Citigroup Ceo
No End Soon to Buyout Boom: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing”.
Mr. Practical – Minyanville
Mr. Practical on Minyanville in response to Chuck Prince:
“This market is like a suspension bridge where one cable at a time is breaking. Still the bridge is standing and people are still driving cars over it hoping the last cable won’t break while they are on the bridge. This is what we call moral hazard, ignoring risk for the sake of return.”
If ever there was market arrogance, the statements by Chuck Prince says it all.
In an interview with the newspaper, Prince said the boom will eventually end, but will continue for now because markets have plenty of liquidity, despite turmoil in the U.S. subprime mortgage market. He denied Citigroup was pulling back, the newspaper said. “When the music stops, in terms of liquidity, things will be complicated,” he said. “But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.
Prince added: “The depth of the pools of liquidity is so much larger than it used to be that a disruptive event now needs to be much more disruptive than it used to be. At some point, the disruptive event will be so significant that, instead of liquidity filling in, the liquidity will go the other way. I don’t think we’re at that point.
In essence Prince says “Play the greater fool’s game until we tell you to stop. At that time we will be short ready to go long. This is just as we did at the last bottom and we will screw you again with the same methodology for as long as you are suckers continue to believe our BS, most likely forever”. The comment “We’re still dancing” might just as well be… “We’re scrambling like SOBs to unload our garbage on you suckers”. I leave it to you to decide whether or not this is the “last dance”.
Moody’s and S&P; – Ratings Companies
Fran Laserson, a spokeswoman for Moody’s, and James Jockle, a spokesman for Fitch, [in regards to subprime blowup] said they had “no immediate comment.”
Mish reply: Isn’t “No comment” telling in ans of itself?
A Coming to Jesus – Institutional Risk Analytics
“S&P;’s actions are going to force a lot more people to come to Jesus,” said Christopher Whalen, an analyst at Institutional Risk Analytics in Hawthorne, California. “When a ratings agency puts a whole class on watch, it will force all the credit officers to get off their butts and reevaluate everything. This could be one of the triggers we’ve been waiting for.”
Mish Reply: Triggers?! We don’t need no stinking triggers. Was there a trigger to the housing subprime blowup? Was there a trigger to the dotcom collapse? Was their a trigger to to the Japanese deflation scenario? Was there a trigger to the Tuplip Mania collapse? Was there a trigger to to to the great depression?
If you want a quote from me, here it is.
Triggers can only be found in 20/20 hindsight and almost all of them wrong. The Smoot Hawley Tariff Act did not cause the great depression. It only made matters worse. There was no trigger to Tulip Mania but there was simple exhaustion. No matter how hard one tries to find “triggers” there really aren’t any other than pure trend exhaustion.
It’s tough calling a top but I am going to try. I suggest the current trend is exhausted. My last “top call” was specially in regards to housing in the summer of 2005. Can lightning strike twice?
Mike Shedlock / Mish/