The Great Expression
"Time is the only critic without ambition."
--John Steinbeck
Wall Street is dusting off its history books for lessons in how to deal with the financial crisis. Traders are quickly finding that this script has never been written.
I wrote a column in 2006 called The State of the Art. It discussed the shifting paradigm for the financial industry as it sat at the crossroads of technology and regulation. 
Two years later, the new world order has emerged.
Fannie Mae (FNM), Freddie Mac (FRE) and AIG (AIG) have been absorbed by the government.
Bear Stearns (JPMorgan (JPM)), Washington Mutual, Wachovia Bank (WB) and Merrill Lynch (MER) were consumed by competitors.
Lehman Brothers ceased to exist altogether.
There are many ways to view this seismic shift. There's anger (as expressed by Main Street), sadness (as savings are destroyed), fear (as reality bites) and confusion (as folks try to understand how this could happen in the first place).
And then there's anticipation, as we cast an eye forward and look for the phoenix that will eventually arise from the scorched earth.
The unfortunate capital market destruction is an inevitable comeuppance, the cumulative result of risk gone awry. It's been percolating under the seemingly calm surface for several years, magnified by financial engineering and consumed by an immediate gratification society.
The socioeconomic consequences will be pervasive as we endure the other side of the business cycle, an unenviable retrenchment that politicians and policy makers tried so hard to avoid. It's certainly scary as new beginnings always are.
Therein lies the opportunity. 
History Doesn't Always Repeat but it Often Rhymes
The longest recession ever The Great Depression lasted 44 months. In the thirteen recessions dating back to 1929, the median S&P bottom occurred 58% of the way through the recession.
If our current conundrum is on par with the worst financial crisis in history in terms of duration and we assume that the business cycle peaked in the fourth quarter of 2007, we could extrapolate that the stock market bottom will arrive in the first quarter of 2010.
The media portrays the Great Depression as a time when everyone in America stood on street corners waiting in a bread line. A closer look shows that similar to today, economic hardship for the middle class began well before 1929.
History teaches us that the stock market crash didn't cause The Great Depression, The Great Depression caused the stock market to crash. It was a manifestation of economic deterioration, much like the modern day sub-prime mortgage implosion.
Social mood and risk appetites shape financial markets, they always have and they always will. The current stock market malaise is, in many ways, simply catching up with preexisting societal acrimony.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.
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Paulson will find a way to throw his old buddies a rope at taxpayers expense.
What a pointless exercise in abusive governmental controls...
Your proposed ban will do nothing other than decrease market liquidity, increase volatility and ultimately make it that much more impossible for anyone but the already super-wealthy to become or remain wealthy...
It's not the day-traders and short sellers who have destroyed our economy. It's the lenders and the borrowers and politicians who have leveraged our future. The only players in the industry capable of accomplishing a "naked short" are the brokers and dealers - you and I could not if we wanted to - our broker would not and cannot allow it...
The short sellers are the only ones in the past 7 years who have been asking what this period of growth was really based upon...
Without dissent, there can be no true price discovery.
Stop blaming traders when investors, voters, politicians, regulators, lenders and borrowers are the ones that brought us to this...
Great article Todd - I only hope that the repeated and more increasingly more invasive attempts to avert what we all know is coming will not explode into a system which never recovers as a result...
First, this isn't anything new. Only the blinders which have reduced a full view of ALL costs are different, but if we look, the picture is really the same. Most of the talk is about an economy that externalizes reality of which activities are pluses and which are minuses. Service jobs are ALL minuses. You can NOT have a service economy. It is always a capital economy, based on real resources. Services can streamline things, speed things up (another minus in a finite planet balance sheet), but they don't really add to the real resource capital in the plus column.
Second: Before a phoenix can rise from the ashes, it has to completely burn up. Then, some kind of input (magic) has to put the ashes together and metamorphise it into a bird again.
Got any magic handy? Neither do I.
It's time to realize this is going to burn, and what is built afterward will come from those who know how to build things from simple inputs like ashes. It may be faster now than in the '30s, but it will be the same process. Start at the bottom, build a pyramid (scheme), climb to top. There is no way to start in the middle of a pyramid when the bottom caught fire first (no real wage increases for 30 years, increasing health care, poor nutritional quality of food, coercive activity by everyone at the top, chains too heavy to carry to the fields).
