I happened to catch an interview on pompom TV (CNBC) with a former Wall St. executive by the name of Joe Grano. I am not familiar with this gentleman or his background but some of his comments caught my attention.
First off, he keeps referring to the current credit debacle as a liquidity issue, there is no liquidity. There seems to be a brain freeze happening among the intelligentsia on Wall St. and Washington. It has nothing to do with liquidity it is an issue of solvency plain and simple. Cats like Mr. Grano need to get this through their skull and the sooner the better. Denial is a fascinating characteristic to observe.
The second item he talked about is some about pricing this illiquid, as he calls it, mortgage paper at certain levels for certain origination's vintages etc. All because HE thinks they are irrationally priced! This is too funny and rather ironic how he must have been away on vacation when the dot coms and telecoms were astronomically priced. No problem there right.
This my dear readers is exactly the problem we now have which is compounded the intial underlying problem. This belief by people like Joe Grano that they know the correct price or level is hubris of the highest order. Mr. Grano wants transparency in the financials, yet in the next breath he disagrees with the current transparent price, instead wanting to replace it with his more intelligent version. Transparency is only good when it fits with mine! Ahhh, their arrogance is only exceeded by the ignorance. I do not direct this at Mr. Grano because he seems nice enough and smart enough but is there something in the water these guys are drinking?
It is truly fascinating that men as steeped in the markets as Mr. Joe Grano purportedly are, would utter such nonsense as we get to hear on an almost daily basis via pompom TV leads me to question their capital market sanity. But then again, losing positions can bring even the mightiest on Wall St. to their knees. One tell in all of this, is that the solutions being offered up, as shallow as they are, illustrate perfectly how dire the current credit situation truly is, contrary to what our esteemed Fed Chairman and Treasury Secretary perpetually tell us.
Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".
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