“Two years ago, for example, when the now-beleaguered Morgan Stanley was trumpeting a 61 percent jump in profits, Grant wrote a pessimistic analysis titled “over the cliff with Morgan Stanley.”

Notes the Washington Post.

Comment

Yes, there were lots of people who saw this coming. The Post mentions two of them – Nouriel Rubini from the Stern School of Business and James Grant of Grant’s Interest Rate Observer. I can name dozens: Kevin Phillips, Richard Russell, Bill Fleckenstein (another perma bear, but none the less right), Peter Schiff, Jim Rogers, Marc Faber, The Daily Reckoning crew….

And yours truly way back in 2006, even pointed out that Fanny and Freddie would be at the heart of the problem:

“Why It’s Time to Sell Goldman,” Money Week, July 2006.

Meanwhile, the Chinese government shows a keener understanding of sound money and the free market than our money men:

“According to numerous Chinese state media news sources today, the Federal Reserve’s continued zeal for propping up the market by injecting illusory liquidity is part of an agenda to gain trust and grease the skids for increased government intervention in financial markets. China Finance, China News and Chaobao Financial News, all state owned media outlets, slammed the Fed for taking action that will only make long term economic conditions worse and devalue the dollar by “creating money that does not exist which leads to the inflation of liquidity, ” a policy contrary to China’s position as a holder of vast reserves of US dollars.”

Nice to see that the Chi Coms are more in synch with the best tradition of this country on the need for sound money. Shows you that our worst enemies are right here at home.

And Anatole Kaletsky states the obvious: Paulson was willing to destroy shareholders in Bear and Lehman but he rushed to defend his old firm.