When's this free fall going to end?
Pedestrians pass before a share prices board in Tokyo -- March 3, 2009
TEXT OF INTERVIEW
Steve Chiotakis: Alright, let's bring in David Buick, a market strategist at the Cantor Index in London. David, with this seeming free fall that's been going on . . . well, what's going on?
David Buick: Well, everybody's trying to find an excuse why they should maintain the level of commitment they have to their investment portfolios, and they're finding it very difficult when you've got a tsunami wave of indifferent, poor economic data hitting you every single day. And until that actually stops and we can see the green buds of recovery, we are going to be in decline for some time, continuing to test new lows.
Chiotakis: Where is the light at the end of the tunnel?
Buick: I think psychological barriers, whether it's 7,000 in the Dow, are quite meaningless at the moment. What I think does matter is, when's it going to stop? When are the authorities around the world -- whether they be the central banks, the governments, the world leaders -- are they going to find a successful combination of their efforts that is going to instill confidence back into the financial sector? The moment that happens, the recovery will be dramatic. And at the moment, there is not the slightest sign of it. The world leaders and everybody except the central banks, who I think are doing a brilliant job, are behaving in a reactive way, and they are applying knee-jerk initiatives instead of a coordinated approach.
Chiotakis: What do you want to see?
Buick: I want to see, basically, all the banks drop their toxic assets in an international cess pit -- which is, costs money for them to do so -- for the opportunity of many of these toxic bonds to be netted off, some who own them and some who were shorted them, so that we can come to an end game and know exactly what the losses are and have been incurred. When that happens, you will find that fresh, private capital will be attracted to the banks, and from there you will see recovery come forward in a pretty dramatic manner.
Chiotakis: So we're hearing reports this morning that the Obama administration is looking at a plan to create a so-called bad bank with a blend of private and public funding to absorb the toxic assets. What's your take on the plan?
Buick: The bad bank I think is again a parochial way of handling it. It's very good for the United States, for America, but as to say, this is not a domestic problem. Everybody's very keen to point the finger of suspicion at the United States of America for triggering this problem. My attitude is all the international banks required very little encouragement, and in their own way they're every bit as involved. And therefore, if you've had an international problem, you need to sort it out on an international basis and not on a parochial basis.
Chiotakis: All right. David Buick, market strategist at the Cantor Index in London. Thank you for joining us.
Buick: It's a pleasure.