Thursday, November 20, 2014

Harvard & Co.: Making Money While the World Burns

ZH: Hugh Hendry: 11/20/2014
Hendry was a well known "perma-bear" investment manager who capitulated last year...
"How I learned to stop worrying and love Central Banks"
"I am charged with making money and not being some moral guardian"...

Merryn: So your basic point here is that if the central banks have your back, there’s no need to have the same kind of risk controls that you used to have.

Hugh: There is less need. Less need. I tell you, I was at a conference with some of the great and the good global macro managers in September in New York and I asked them all the question, “If the S&P is down 12% what do you do? Are you selling more or are you buying?” Guess what? They’re all buying. So the central banks have created a behavioural tic which is becoming self-reinforcing and I believe we saw another manifestation of that behaviour in October.

Moral hazard visualized: "There is less need, I tell you"
Index Put/call ratio

And then Ilargi's response follows:
Automatic Earth: Raul Ilargi: November 19th, 2014
I think you can tell from the title what he felt about Hendry's capitulation. Ilargi also included the child poverty stats below. Needless to say, I agree 100% with Ilargi - what is there left to say about the best educated people in the world devoting all of their energies to monetizing the dismemberment of the real economy?

The Last Days of Self-Cannibalizing Greed
Wall Street lured and corrupted some of the smartest people on the planet and then reduced them to nothing more than clever gambling rent seekers - trading pieces of paper back and forth in a zero sum game, and presiding over the liquidation of the real economy. This isn't just about a certain class of people, this speaks to a pervasive philosophy that views economics as a a zero sum game with everyone for themselves. It's Ayn Rand's "Rational Self-Indulgence" taken to its logical final conclusion.