But, rave... aren't we elitist? Intellectually, at least? [?][?] And you're spot-on about the Asperger's kid.
On Sat, Mar 20, 2010 at 1:28 PM, Kelwyn <ravena...@yahoo.com> wrote: > > > I read about it in Vanity Fair, too, but I didn't want to sound elitist ;> > > Once again, the information these handful of men used to get fabulously > rich was hidden in plain sight. It was there for anybody to see. It reminds > me of the fable about the Emperor with No Clothes. > The Wall Street Emperors had been walking around bucket-ass naked for a > long time but everybody - especially the alleged regulators - refused to see > it. This Asperger guy is like the little kid in the fable who had not only > the eyes to see but the courage to voice his conviction. > > ~rave! > > > --- In scifinoir2@yahoogroups.com <scifinoir2%40yahoogroups.com>, Martin > Baxter <martinbaxt...@...> wrote: > > > > Read that as well, rave, in Vanity Fair. In a sense, you want to applaud > it > > as True American Ingenuity, even as you want to rail at the thought of > such > > blood money being made. > > > > On Sat, Mar 20, 2010 at 9:15 AM, Kelwyn <ravena...@...> wrote: > > > > > > > > > > > I saw this on 60 minutes. I was fascinated by the guy who suffered from > > > Asperger's syndrome who figured out what was going on by doing > something > > > really simple - he read the prospectuses he requested from the > brokerage > > > houses. He made $750 million. Reading is fundamental. > > > > > > ~rave! > > > > > > > > > --- In scifinoir2@yahoogroups.com > > > <scifinoir2%40yahoogroups.com><scifinoir2% > 40yahoogroups.com>, Keith > > > > Johnson <KeithBJohnson@> wrote: > > > > > > > > > > > > Here's the link to the NPR "Fresh Air" interview with the "The Blind > > > Side" author, whose newest book "The Big Short" tells how some people > > > anticipated and profited from the financial meltdown. I'm amazed at > this > > > guy's writing diversity, but the story here is shocking, for all that > we've > > > been in this mess for a couple of years now. To hear how some relative > > > amateurs figured out how badly the system was going to fail is bad > enough. > > > To understand that institutions were actually buying and selling > insurance > > > against that failure--for as cheaply as 1/10 of one percent on the > > > dollar--is amazing. To hear how these crap bond packages were falsely > rated > > > as AAA loans is maddening. And to try to understand again, how none of > the > > > people leading these deals anticipated or cared about the absolutely > > > inevitable catastrophe is...impossible. > > > > I highly recommend taking the 45 minutes to listen to this interview > just > > > to be amazed and disgusted all over again.... > > > > > > > > ********************************************************************* > > > > > > > > > > > > http://www.npr.org/templates/rundowns/rundown.php?prgId=13&prgDate=03-16-2010 > > > > > > > > and here's a written excerpt from the interview: > > > > > > > > http://www.npr.org/templates/story/story.php?storyId=124690424 > > > > > > > > > > > > > > > > Writer Michael Lewis is the author of Moneyball, Liar's Poker, and > The > > > Blind Side, books with vastly different subjects but a common theme: > > > outsiders with innovative ideas who find astonishing success. Lewis' > newest > > > book continues that narrative. The Big Short: Inside the Doomsday > Machine > > > chronicles the 2008 financial collapse through stories of the people > who > > > realized what was happening to the U.S. economy while it was happening > â€" > > > and then made vast fortunes by betting against the markets. > > > > > > > > > > > > > > > > > > > > "Everybody [on Wall Street] was working with the same set of facts > about > > > subprime mortgage lending â€" about how subprime mortgage loans were > turned > > > into bonds and repackaged and turned into CDOs and so on and so forth," > > > Lewis tells Terry Gross. "[And] the vast majority of the people in the > > > markets took those facts and painted one kind of picture with it; it > was a > > > very pleasant picture. And a very small handful of people took the same > > > facts and painted a completely different kind of picture with it. [I > wanted > > > to find out] 'What is it that enables [the people who bet against the > > > market] to paint that picture?' and 'Why do these people look at the > world > > > differently?' " > > > > > > > > > > > > > > > > > > > > > > > > > > > > Dr. Michael Burry > > > > > > > > One of the most compelling stories Lewis tells in The Big Short > follows a > > > doctor, Michael Burry, who decided to leave his neurology residency > after > > > his investment blog attracted attention from money managers across the > > > country. Burry started a hedge fund named Scion Capital, which, Lewis > > > writes, was "madly, almost comically successful" â€" even when the > Standard > > > & Poors index fell. > > > > > > > > While investigating stocks to invest for his customers, Burry > discovered > > > that the bond market was absorbing subprime mortgage loans in > incredible > > > volumes. Soon he realized that the millions of dollars of credit > swirling > > > around the market were artificially inflated and almost worthless. > > > > > > > > Burry figured that he could bet against pools of these subprime > mortgage > > > loans using an instrument called a "credit default swap," essentially > > > insurance on a corporate loan. Burry persuaded the investment banks to > > > create credit default swaps for the subprime mortgage market. > > > > > > > > "As the pools of loans that are underneath these bonds start to > default," > > > Lewis says, the investment banks that gambled on the subprime mortgage > loans > > > were forced to send Burry money daily as the bonds went bad. "Wall > Street > > > firms, they were on the other side of the bets." > > > > > > > > > > > > > > > > > > > > > > > > Charles Ledley and Jaime Mai > > > > > > > > Ledley and Mai were two guys in their early 30s who decided to start > > > their own hedge fund with just over $100,000. They quickly made more > than > > > $15 million by betting on financial events that are extremely unlikely > to > > > occur â€" and therefore didn't cost much to bet against. > > > > > > > > "They thought that Wall Street underestimated the likelihood of > really > > > unlikely events," Lewis says. "So they would buy options to buy stocks > at > > > prices far, far away from where the stocks were currently trading. They > did > > > this with currencies, they did it with commodities. They scoured the > world, > > > essentially looking to make bets on extreme things happening." > > > > > > > > > > > > > > > > Soon, Ledley and Mai stumbled into the subprime mortgage market and > > > realized that they could bet against not only the loans but also the > > > financial institutions themselves. > > > > > > > > "They're able to piece together a clear picture of what's going on in > a > > > matter of months," Lewis says. "They become less interested in the bet > than > > > the social implications of what they're learning. They go to the SEC. > They > > > go to The Wall Street Journal. They're screaming at the top of their > lungs, > > > 'My God, there's fraud in the system.' " > > > > > > > > By betting against subprime mortgages, Ledley and Mai's $15 million > > > investment ballooned to $120 million. Soon, Ledley began to experience > > > migraines and anxiety attacks. > > > > > > > > > > > > > > > > > > > > > > > > "They were stressed about being right," Lewis says. "I think they > were so > > > stressed that they realized that this wasn't a bet against a company, > this > > > was a bet against an entire system. And it was a bet that arose from > their > > > insight that the system had become rigged â€" that, essentially, Wall > Street > > > had become a giant Ponzi scheme." > > > > > > > > Lewis says the two men â€" like Dr. Burry â€" were able to see the > > > failures of the market before the rest of the world did because they > viewed > > > the world differently. > > > > > > > > > > > > > > > > > > > > "This is the story of human perception as much as it is anything > else. > > > And their attitude toward the financial markets was peculiar," Lewis > says. > > > "It was peculiar to be running around the world looking for unlikely > things > > > that might happen. ... And it told you something about Wall Street and > ... > > > the way the markets were functioning when they were dysfunctional. > There > > > weren't enough people thinking this way. There weren't enough people > taking > > > into account the real likelihood of extreme change in the world." > > > > > > > > > > > > > > > > > >
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