Tuesday, September 1, 2009

China Sovereign Wealth Fund Chairman with Quote of the Year, 2009

Every year we try to find a quote of the year - frankly with the way the world has been going picking one each year is impossible. And it is hard to pick between people saying incredulous things because they actually believe it or quotes based in fact but completely amazing in their utterance

In 2007, there were a few great candidates in retrospect - Hank Paulson saying

I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained.

probably is the most infamous.

I don't have a great memory for these type of things like those who can pull out movie quotes from a movie seen 5 years ago, but in the past few weeks we were reminded of Ben Bernanke's famous utterance at Jackson Hole Wyoming in late summer 2007

it is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions

I know! Knee slapping humor! Can you believe people take this guy at his word? haha

I personally loved this one because the pure arrogance of the Anglo Saxon model is exposed - because only if you let bankers run wild, will they bring you innovations that create "prosperity for all. (translated: prosperity for them) If you somehow limit their compensation or actions, they will move to a country that will not! And then your economy will suffer the consequences of their moving. Just imagine how thankful Americans would be (and less debt our grandchildren would have) if the the small sliver of financial innovators had fled the country in 2004 due to "unfair" wage schemes they were not allowed to have according to the "free market" (free market defined as London and New York) My gosh they might have had to destroy Dubai instead of us.

Emerging markets are being favored in part because "financial innovations are less common in developing countries," said Heidemarie Wieczorek-Zeul, German economics minister, in remarks to the IMF/World Bank Development Committee


In 2008 the candidates are countless; my memory is a blur from so many Sunday night CNBC specials praying handouts to financial oligarchs would not upset the Asians enough to drop their markets >10% on the open. That 12 months has all become fuzzy. I did mention in a December 2008 piece this quote which summarizes which has a special place in my heart because of what the markets have become:

Mike O'Rourke at the institutional broker BTIG: "These nearly 5% intraday moves are becoming ridiculous. The ridiculous aspect is that they occur in roughly half-hour time spans, and bids instantly disappear."

Watch the tape, and the dominant impression is of machines -- cybertrading funds using algorithms -- arguing among themselves.

Boo Yah, Mr. O'Rourke - just remember they "provide liquidity" and what would we have if we did not have liquidity. If we could not trade stocks at 3/3000ths of a second (and sell them before a human could blink an eye) markets would most likely collapse. Just imagine the horror if stocks traded in .01 increments... or dare I say 0.02. Civilization as we know it would end.


So you can see the bar is extremely high - I mean Yao Ming high. It takes quotes that literally knock me out of my chair ... very little anymore creates slack in my jaw after what we have witnessed the past few years. Seeing Brian Wesbury say "Housing is only 4.5% of GDP, what's the big deal anyhow" in 2007 creates a certain level of tolerance. That said, I thought this quote by the Chinese regarding what the U.S. is doing with monetary policy was going to be the easy winner for 2009.

We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.

But these Chinese are a competitive bunch. This quote by the China Sovereign Wealth Fund Chairman Lou Jiwei, has to be the new favorite. Personally I believe what he says is being echoed (in quiet whispers of course) by the financial elite across the world in their smug satisfaction that central banks are doing their personal bidding at WHATEVER cost to the peasantry, but for one to utter these words out loud... bravo.

It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose.

Simply breathtaking. We still have 4 months to go but it's going to take a Michael Jordan-esque performance to knock that one off. And now I see why relentless dip buying is the order of the day - we can't lose! As long as "we" are not the US peasants and their grandkids.

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