Thursday, March 31, 2011

The Big Short

I just finished reading the The Big Short, by Michael Lewis. Basically it details how a few really bright men figured out that the sub-prime mortgage market was going to implode causing the worst financial crisis since the great depression.  These few people shorted the market (made a bet against it) and made billions while all the major banks and brokerage houses went belly up.  What disturbs me about this whole story is where were the really smart guys in the government to see the same data and therefore head off the whole crisis.  They were either a sleep at the switch or they just don't exist.  Why were the regulators allow to classify these really worthless bonds as AAA?  Why didn't government just freeze the teaser rates?  Why were people with no income told how to lie to get a ridiculously high loan when they had no means to repay them?

 What insentive do the banks have to make good loans when they can make billions by making bad loans.  If all hell breaks loose, the government just bails them out.  When I am King, a lot of these assholes are headed to prison.


  1. The problem is the really smart ones stay out of government because they know they can make more money in the private sector. That, and if they do catch a mistake and correct it the best they'll get is a pat on the back and the words "Good job," but in the private sector the catch one mistake and find a way to profit from it and make their bosses look good or undercut their bosses and take their positions they could be set for life.

    When you are king I'll help send these assholes to prison.

    (As an FYI, I have family in both banking and government, so I speak from personal knowledge)

  2. Thanks for the support. I think your 100% right.

  3. Thanks for the support. I think your 100% right.

  4. The govt is following its same protocol. Regulate and then don't oversee.