Second Verse, Same as the First

Okay can we be honest for a second?

The similarities between now and the pre-crisis era are fucking sickening at this point.

There, I said it.

Now read this:

Charlie Bilello takes a time machine back to May of 2007 – the charts are all you need to see.  (PensionPartners)

and this:

“The most notable thing in the financial markets today is the absence of anything notable: volatility has collapsed to near-historic lows.”  (Economist)

and this:

James Saft: Investors appear to have forgotten two prime lessons of the last crisis: complexity is expensive and leverage is dangerous.  (Reuters)

To recap – Volatility is nowhere to be found – not in currencies, in fixed income or in equities. Complacency rules the day as investors and institutions gradually add more risk, using leverage and increasingly exotic vehicles to reach for diminishing returns in an aging bull market. This as economic growth – led by housing and consumer spending – stalls out and the Fed removes stimulus that never really worked in the first place.

And once again, the media is oblivious for the most part, fixated as it is on a French economist and the valuations of text messaging startups.

None of this has to mean disaster is imminent.

But man I wish it didn’t feel quite so much like de ja vu.