naked capitalism Fri 2010-07-16 16:31 EDT

Debunking Michael Lewis' Subprime Short Hagiography

Lewis' tale is neat, plausible to a mass market audience fed a steady diet of subprime markets stupidity and greed, and incomplete in critical ways that render his account fundamentally misleading...The Big Short focuses on four clusters of subprime short sellers, all early to figure out this ``greatest trade ever'' and thus supposedly deserving of star treatment...The anchor is Steve Eisman...Lewis completely ignores the most vital player, the one who was on the other side of the subprime short bets...Who really was on the other side of the shorts' trades is the important question... ...these are the international equivalent of widows and orphans...Eisman is no noble outsider. He is a willing, knowing co-conspirator. Even worse, he and the other shorts Lewis lionizes didn't simply set off the global debt conflagration, they made the severity of the crisis vastly worse. So it wasn't just that these speculators were harmful, and Lewis gave them a free pass. He failed to clue in his readers that the actions of his chosen heroes drove the demand for the worst sort of mortgages and turned what would otherwise have been a ``contained'' problem into a systemic crisis. The subprime market would have died a much earlier, much less costly death absent the actions of the men Lewis celebrates. They didn't simply keep the market going well past its sell-by date, they were the moving force behind otherwise inexplicable, superheated demand for the very worst sort of mortgages...

Debunking Michael Lewis; naked capitalism; Subprime Short Hagiography.

Fri 2009-11-20 10:30 EST

Curious Meeting at Treasury Department >> naked capitalism

Yves Smith

The Treasury invited a small group of bloggers for a ``discussion'' with senior officials on Monday...we bloggers and the government officials kept talking past each other, in that one of us would ask a question, the reply would leave the questioner or someone in the audience unsatisfied, there might be a follow up question (either same person or someone interested), get another responsive-sounding but not really answer, and then another person would get the floor...the people we met are very cognitively captured, assuming one can take their remarks at face value. Although they kept stressing all the things that had changed or they were planning to change, the polite pushback from pretty all the attendees was that what Treasury thought of as major progress was insufficient...It was also striking to see that the Treasury officials did not articulate vision for a banking system for the 21st century that was materially different that the one we have now...

Curious Meeting; naked capitalism; Treasury Department.

Thu 2008-09-11 00:00 EDT

Clotaire Rapaille, We Salute You // Brainsturbator

``One of the most accomplished, audacious and ambitious con men alive today''; ``maybe, Rapailles real target for his lexicon of persuasive techniques isnt the audience, the masses that hes allegedly manipulating. Maybe his real target is CEOs themselves''

Brainsturbator; Clotaire Rapaille; salute.