Thursday, August 5, 2010

Todd Harrison: Financial Virus Permeats the System

and carbon-based traders and fund managers are calling it quits.

Financial Virus Permeates the System (Todd Harrison, 8/5/2010 Minyanville)

"We live in interesting times. Over the last two years, a financial virus spawned, infecting the economic and social spheres as a matter of course. This isn’t just about money anymore; our civil liberties, the foundation of free market enterprise, and the quality of life for future generations are dynamically shifting as we traverse our current course.

"I once offered that Shock & Awe was a tipping point through a historical lens. As Baghdad blew-up on CNN, I somberly sensed America would never be the same. That’s not a political statement -- we don’t know what would have been if we didn’t invade -- it’s simply an observation. World empathy turned to global condemnation, almost overnight.

"If we’ve learned anything through these years, it’s that unintended consequences tend to come full circle. Whether it’s the moral hazard of bailing out some banks, the gargantuan profits of a chosen few -- Goldman Sachs (GS), JP Morgan (JPM), Bank America (BAC), Morgan Stanley (MS), Wells Fargo (WFC) -- the caveats of percolating protectionism or the growing chasm of societal discord, times they are a-changin’ and it’s freaking people out.

"As The War on Capitalism intensifies, I expect financial fatigue to evolve in kind. We’ve already seen the burnout manifest in trading volume -- 70% of the flow are the robots -- and we’ve witnessed it in financial media, with reported viewership of some of CNBC’s marquee shows down as much as 25% year-over-year.

"Sun-tzu once said, “If your enemy is superior, evade him. If angry, irritate him. If equally matched, fight, and if not, split and reevaluate.” As we navigate unchartered waters and sail through The Eye of the Financial Storm, an increasing number of people are weighing their options -- and some of the smarter folks I know are “going dark.”

"What does that mean? They’re selling businesses, unwinding trading operations, or otherwise insulating themselves from the capital markets. The underlying reasoning is straight out of an Ayn Rand novel: “I can’t compete and when I do, the rules of engagement change in the middle of the game. I’ll let the powers that be vanquish themselves and return in three to five years to sift through the remains.”" [The article continues.]

I stopped visiting his site ( as often as I had used to when he supported the TARP by saying it would be better to treat a cancer than have a car crash (and we ended up a car crash and a terminal cancer). But he always strikes me as honest and compassionate, with not much of a hidden agenda.

Harrison ends his piece with these words [emphasis is mine]:

"As we grasp at The Last Gasp Bubble and attempt to operate in the best interests of ourselves and those whom we love, I simply wanted to share that some of the smarter folks in the know have chosen to extricate themselves from an increasingly tenuous struggle. I suppose, in a way, they’re lucky to have that option.

"I don’t know if this distancing qualifies as apathy but it most certainly warrants some thought provocation as we collectively find our way. I remain of the view that preparedness and perseverance are precursors to profound possibilities; we simply have to go through it to get through it.

"May peace be with you."

I hope we can all survive. (But "we" don't include the ruling class, as far as I'm concerned.)

(H/T willsin)


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