Wall Street WARZONE
“Hiring rebounds on Wall Street!” USAToday, “Good News for the Economy?” Or Bad Sign New Bubble’s Blowing? Another Credit Meltdown’s Coming?
by Paul B Farrell, JD, PhD
| Discuss | Print | 5/5/2010

“Wall Street bullish again, on hiring,” says USA Today’s Paul Davidson. But is it “Good Sign for the Economy?“ … Maybe a great sign for Wall Street’s short-term traders, commission hungry brokers and Wall Street’s too-greedy-to-fail, fat-cat CEOs. … but not for the economy … not for Main Street America’s 95,000,000 long-term investors praying Wall Street doesn’t crater again … for long-term investors it’s bad news … after scamming the Fed and US Treasury for an estimated $23.7 trillion in bailout bonanza bucks since late 2008, it looks like Wall Street’s hiring big to blow a new bubble, beef up bonuses in 2010, and to hell with the long-term. USA Today lays it all out ….

The financial services industry, among the hardest hit in the recession, has been adding jobs at a brisker pace recently … A Wall Street rebound is good news for the economy. It signifies U.S. corporations are again raising cash by issuing stock and bonds as their prospects improve, with financial firms underwriting the deals. Beefed-up staffs have a ripple effect on restaurants, printers and car services in financial centers … The surge is touching investment and retail banking, wealth and asset management, and stock and bond trading. … businesses such as the sale and trading of bonds and commodities are booming …

JPMorgan Chase says it’s adding 1,000 bankers across the USA … Bank of America has more than doubled its intern and graduate hiring this year. It currently has 3,600 job openings … Edward Jones plans to add more than 1,000 financial advisers in the U.S., up from 800 last year … UBS and Deutsche Bank say they’re hiring robustly in areas such as wealth management and bond sales. ‘Hiring is up substantially’ over the 200 bankers and traders Deutsche Bank added each of the past two years …

Smells bad, like we’re already well into a new Wall Street credit bubble, warns DowJones/MarketWatch: “A fivefold surge in the sale of junk bonds, a drop in borrowing spreads to two-plus-year lows, and heightened buzz about a coming wave of leveraged buyouts are the latest signs that credit markets are getting close to their pre-crisis levels — and, to some observers, sowing the seeds for a dangerous new borrowing binge” … yes, another Wall Street-sponsored bubble blowing, and a new meltdown coming … possibly as early as 2012 … the next presidential elections …

New 10-Question Investors’ Test on “Irrational Extremes:” Are You an Exuberant Bull? Fearful Bear? Or Insatiable Pig?
by Paul B Farrell, JD, PhD
| Discuss | Print | 4/13/2010

When the nineties dotcom mania was reaching it’s peak, behavioral finance experts were emerging into power—warning Main Street investors that this time “it is not different,” that the so-called “new economy” was the illusion, that the eternal cycle of greed and fear makes investors forget and lose when playing this “extreme sport.” Few listened. And few remembered the next time around. The lessons are rarely learned and the price was high: A loss of $8 trillion in market capitalization during the 2000-2002 bear recession, a market that’s averaged a meager 3% annually since that last peak, and a behavior pattern that guaranteed another bubble and another bust as investors and homeowners transferred their bubble-mindset from stocks in the recent past, to housing in the present, and now into an elusive deficit bubble that will haunt us for many tomorrows, individually and as a nation.

Pop! Pop, pop, pop! Markets are inherently risky, yet the adrenaline rush that investors get from short-term trading is what keeps the markets going, bull or bear, greed or fear, win or lose, cycle after cycle—and will for all time. Investors can’t stop overshooting the mark, can’t keep from going to extremes, from bull to bear to bull, ad infinitium. It’s in our blood, our genes, it’s who we are, extremists. (More)