Victor Niederhoffer the greatest speculator

Victor Niederhoffer the self proclaimed greatest speculator in the history of speculation is blaming Fed Chairman Bernanke for his recent losses. The first rule in speculation is, you are responsible for your own losses. Time to read Chapter 5 of The Education of a Speculator

Victor Niederhoffer : Daily Speculation

A much better example of the disaster of central planning is the recent monthÂ’s destruction of wealth set off by the coordinated set of plans to jawbone the economy and inflation down set off by the Fed Open Market Meeting of May 10, 2006. It started with an attempt to show that inflation was rampant, the public didnÂ’t get it, and the markets needed a dose of tightening to bring things back to proper order. The attempt was imposed from above based on the vision of a single personage, who coordinated a series of staged speeches about how vigilant the Fed was and how concerned about the failures of the knowledge of individuals they were. The loss of wealth that it set off was in the 3 to 4 trillion range as all emerging markets, Asia, Europe, and Latin America declined 10 to 20% in lockstep from a 45 trillion or so base. By June 29, 2006 it was all over. The last open market meeting emphasized how restrained inflation was, how the Fed would be guided by markets in the future, and how the tightening might be near its end. The world markets recovered an average of 5% from their most recent lows, and will undoubtedly move back to their former levels in the due course of reasonable time, like a few months. But what deadweight costs, what frictional costs, what individual hardship and poverty was created by it all.

What fools these central planners must think we are. What arrogance of power Khrushchev, Mao, Fred Lee and Ben Bernanke displayed in trying to consolidate power about them. What stooges the media and other bit players in the debacle were as they fanned the flames of total economic Armageddon as if puppets in a performance.

Let the story of this recent disaster in centralized planning, this superposition of the vision of a single leader for the wisdom of the market, this attempt to consolidate power behind a single voice (possibly engendered by the pretty woman transgression), serve as a vivid, and compact episode in the US of why market based solution, and pluralism, and suffering the consequences of failure are so necessary to the common good. And let us learn how to profit from such orchestrated forays in the future.