Our monthly round-up of the best quotes from the financial world.
While looking for some of the best investment quotes over the past month, I can't help wondering if the world is really so bearish, or if the bears are simply more quotable than the bulls.
Bearfest
Leading the sleuth -- the collective term for a group of bears, apparently -- is Nobel laureate, Paul Krugman:
"We are now, I fear, in the early stages of a third depression. … And this third depression will be primarily a failure of policy … governments are obsessing about inflation when the real threat is deflation."
Even gloomier is Elliott Wave guru, Robert Prechter. Predicting that the Dow is likely to fall well below 1,000 over perhaps five or six years -- a loss of 90%! -- he comments:
"I'm saying: 'Winter is coming. Buy a coat.' Other people are advising people to stay naked. If I'm wrong, you're not hurt. If they're wrong, you're dead. It's pretty benign advice to opt for safety for a while."
George Soros, while not making such stark and dramatic predictions, agrees we are in trouble:
"The collapse of the financial system as we know it is real, and the crisis is far from over. Indeed, we have just entered Act II of the drama."
Taking a light-hearted pop at Soros was another bear, the always-quotable Hugh Hendry, interviewed by Bloomberg:
"George is someone whose brilliance we all have aspired to match … but you have to remember something: The richest people on the planet become socialists. Socialism is a great thing for George. I want to bring George down, I want George's reputation, but George is now embracing socialism. What is Socialism? Socialism is when you build a moat around the castle."
It's the system
Hendry goes on to take a shot at what he sees as one source of the problem:
"Today in Europe we have a new axis of financial evil, it is German and French bureaucrats and politicians who are determined to destroy the wealth and the hard-working entrepreneurs that we find on this continent."
It was also interesting to read the comments of Lord Myners recently, who appeared to be criticising the government of which he was a member:
"There is nothing progressive about a government that consistently spends more than it can raise in taxation and certainly nothing progressive that endows generations to come with the liabilities incurred with respect to the current generation."
At a more micro level, the price of Brent crude oil was swayed by the actions of a drunk market trader, who accumulated a long position in Brent in excess of 7 million barrels of oil while 'under the influence' in June of last year. Imposing a fine of £72,000 and a five-year trading ban, the Financial Services Authority (FSA) made clear that:
"[The trader's] drunkenness does not excuse his market abuse."
The trial has also begun in Paris of the alleged rogue trader Jérôme Kerviel, the 33-year-old who is accused of losing Société Générale, France's second biggest bank, €4.5bn (£4bn) through unauthorised speculative trades. According to Kerviel:
"At the heart of the great banking orgy, traders are only given the same consideration as any street prostitute: A quick thank you for a good day's takings."
Questionable behaviour was under the spotlight in the US too, with Phil Angelides, Chairman of the US Financial Crisis Inquiry Commission, looking into the activities of Goldman Sachs:
"As I have said to the Goldman people, it's clear you helped build the bomb of all these synthetic instruments ... it's pretty clear they [also] built a bomb shelter when they went short. Now, the question is, did they help light the fuse by marking down prices and making these aggressive collateral calls on AIG."
Giving it all away
While Hendry was critical of Soros for 'socialism', it's not socialism if you voluntarily give your wealth away, as Warren Buffett has done. Encouraging the rest of the super-rich to do the same, Buffett wrote in Fortune magazine:
"I've worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions."
"My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery."
Let's see how many take up his '$600 billion challenge'.
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