The market is the enemy

Scary words when coming from the leader of the free world:


A senior US official told The New York Times that President Obama warned the Europeans – based on his own experiences early last year – that it was no good playing catch up with the markets. They had "to get out ahead as much as possible" by producing a rescue plan so enormous that market speculation, against the euro, and against heavily indebted EU countries, would be shocked into submission.

Dealing with the markets was like dealing with a military enemy, Mr Obama said. You had to use "overwhelming force". He also offered help from Washington to buy up euros for dollars and ease the pressure on European central banks.

 

It would be more accurate to say that reality is the enemy. The governments need to credibly get their act together.  The above quotes further confirms that world leaders are trying to use the US financial crisis playbook for the Greece/Soveriegn debt crisis. The market movement today suggests that the market is still skeptical of this bail out attempt. Even if people think it will work, it is useful to remember that TARP was passed on October 3, 2008 and the S&P 500 bottomed quite a few months later on March 6th, 2009.

  
Hat tip: Naked Capitalism

About

I studied Bioengineering at the University of California at San Diego. While there I served as a trustee on the investment committee of the UCSD Student Foundation, a group that manages an endowment to fund scholarships. While in college I applied my interest in finance and economics by working as a summer associate at Clarium Capital Management, working part time my senior year, and joining full time when I graduated in 2006, staying there through August 2010. I am currently working as a portfolio manager at another global macro hedge-fund in the Presidio (And blogging about more directly market related ideas at their restricted blog). I’ve been focusing on quantitative finance, currencies, commodities, the interplay between finance and politics, demography and other long term trends.

Disclaimer: You shouldn’t consider anything on this site to be a recommendation or solicitation to buy, sell, or hold any securities or commodities. I’m not offering you investment advice. I or the company I work for may hold positions in securities that I mention.