Tuesday, March 25, 2008

Marginalizing Peter Bernstein

John Maudlin's newsletter gave the stage this week to Peter Bernstein. I suffered through the tedious piece waiting for a whiff of insight when I came upon this doozie of a paragraph:

The root of today's problems in the financial markets and in the economy as a whole is the household sector. The point needs no elaboration, but its significance cannot be minimized. As we have argued on more than one occasion, the shrinkage in the personal savings rate is not the result of consumer profligacy, as other commentators persist in describing it. Rather, the savings rate has been suppressed by a slowdown in the growth of household incomes.

At this point, your Commi-dar should be blaring.

Yeah dunderhead, our neighbors with their BMW, adjustable mortgage, cleaning ladies, who eat or order out every meal aren't saving because those evil businesses aren't paying them more.

They are borrowing because they have to? My butt they are.

How about this Peter, "if you make less money, you should spend less" - no matter what the reason for your earnings shortfall???

Surely they can work sage advice like that into the lofty curriculum at Harvard, no?

According to Wikipedia, Peter Bernstein is a 89 year-old Crimson alum. I don't care what he did or how sharp he was a half century ago. At this point he's a decrepit agitator who doesn't merit an audience. Kind of like that other spotlight-craving egomaniac.

These Morons really do live in an alternate universe where up means down, right is wrong, and cause and effect are conflatable. Bernstein reminds me of those smart guys who were insisting that social problems like hunger, obesity, and expensive healthcare explain why public schools stink. Here is the link for that one. I'll warn you, it is a long, edifying post - albeit mostly on Health Savings Accounts (HSAs).


Taylor Conant said...

Hey, you've got Commi-dar too?!

I had to take mine into the shop the other day to have it checked out... I kept being accused of false readings on my equipment. However, just as I suspected, my Commi-dar turned out to be working just fine!

Fancy that...

Unknown said...


Do you have any comments about the Bear Stearns bailout? It seems like everybody, including Forbes and The Economist, are pussyfooting around the real issue, namely the integrity and transparency of the system that guarantees stated payouts of derivative financial instruments. Unless one allows the shit to hit the fan occasionally, the needed cleanup will never happen. I don't see a need for new regulation, I simply would like the regulative authorities to do their job, and yank the securities licenses of companies that are under insured.


CaptiousNut said...


As for the Bear Stearns bailout, I guess I don't have much to say. There's so much written on the egregious fraud, what more could I add? I only had the anecdotal bit about Josh Weintraub. Some insider I am!

One thing worthy of a mention - commodity guru Jim Rogers blasted, "The only reason Bear didn't want to go through traditional bankruptcy was that in that case they'd (BSC management) would all have to return their December bonuses..."

In other words, a traditional bankrupcy, where the assets of the firm would be auctioned off, might have netted much more than the $272 million price equivalent of $2 per share. So common equity holders initially got sold down the river so management could retain 2007 bonuses. Whether or not this is true is beyond my ken. I just found it interesting.

A great place to read about BS like the BSC deal is on Calculated Risk - the comment threads are pretty edifying.

Sorry I can't add more for you on Bear. Of course, I do agree with your points but have "priced in" those type of injustices into my chi and my portfolio. There'll always be crap like that going on until the size, scope, and mandate of our government drastically change. The best we can do is to protect ourselves from this known monster and perhaps try to make a buck or two from its predictable blunders.

Forbes I still read though its definitely been known to pussyfoot around many an issue (greenism, John McCain, etc.). The Economist I think is a joke - though admittedly I haven't so much as looked at it in years.