Quotables

"In today's regulatory environment, it's virtually impossible to violate rules."

Bernard Madoff, money manager, Oct. 20, 2007
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"Existing-Home Sales to Trend Up in 2008"

Headline of a National Association of Realtors press release, Dec. 9, 2007

On Dec. 23, 2008, the same group said November sales were running at an annual rate of 4.5 million—down 11% from a year earlier—in the worst housing slump since the Depression.

There has not been one single month in the last two years the NAR has NOT revised their previous numbers downwards. The revision always comes a month or two later. Expect the November numbers to really be around 4.1 million annualized.
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"I expect there will be some failures. … I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system."

Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008. In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup needed an even bigger rescue in November.

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"I'm not an economist but I do believe that we're growing."

President George W. Bush, in a July 15, 2008 press conference.

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"A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!"

Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008. At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.

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AIG "could have huge gains in the second quarter."

Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008. AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $300 - 350 billion to keep it afloat. Most of that will go to Goldman Sachs, as they were AIG's biggest purchaser of CDS.

May 9 - $40.28 per share. Dec. 31 - $1.57 per share
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"I think Bob Steel's the one guy I trust to turn this bank around, which is why I've told you on weakness to buy Wachovia."

Jim Cramer, CNBC commentator, Mar. 11, 2008. Two weeks later, Wachovia came within hours of failure as depositors fled. Wachovia shares were at $27 on March 11 - By Dec. 31, they were at $5.50. Thanks for the 80% loss, Jimbo.

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"It's not based on any particular data point. We just wanted to choose a really large number"

A US Treasury Department spokeswoman explaining how they settled on $700bn for the first 'bailout' of the economy. Reported on forbes.com

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"I think this is a case where Freddie Mac (FRE) and Fannie Mae (FNM) are fundamentally sound. They're not in danger of going under…I think they are in good shape going forward."

Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008. Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.

To date, the total has exceeded $1.75 Trillion given FNM and FRE, with another $5 Trillion pledged. All the money spent so far was to repurchase MBS sold by FRE and FNM to overseas investors, mainly the Chinese.


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“Anyone who says we’re in a recession, or heading into one — especially the worst one since the Great Depression — is making up his own private definition of “recession.’”

Commentator Donald Luskin the day before Lehman Brothers filed for bankruptcy, The Washington Post, Sept. 14.

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And, the best for last......

Andrew Lahde, a hedge fund manager who quit after winning big betting against the big financial companies, wins the award for gracious farewell in his valedictory note to his investors, who were up 866%from the start. Lahde's Hedge Fund was only one year old when he quit:

"The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking... All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."