"describing the financial system by describing the holes in it"
fek:
What’s great about The Big Short … is that you realize about halfway through it that it’s a lot like Gone in 60 Seconds: the good guys are, at best, car thieves. That said, they’re still better than the bad guys, who are the worst suckers in the history of suckers. … So while, sans-context, you shouldn’t root for the car thieves/small hedge fund managers who predicted all of this to win, in the scheme of these particular things, how can you not? These guys continued to try and warn everyone off of a financial apocalypse scenario, and when nobody would listen, well, they just pulled the lever and every slot in the house rang up Triple-7s as they told the casinos would happen. It’s a great story.
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I wrote a 6/1/2010 post about The Big Short and quoted from a radio interview Michael Lewis did. (If you follow that last link, you’ll see that there’s way too much throat-clearing in my old post, and you can skip all of it by scrolling down to the paragraph that starts with “The Big Short is superb for the same basic reason Nat Fein’s photo of Babe Ruth’s retirement is superb.”
Here’s why I’m even mentioning my old post: What Lewis said in that radio interview fits with what Foster Kamer wrote above. Lewis told the interviewer …
Why did they see what other people couldn’t see? Why did they see that this market was doomed? And the more I kicked around with them, the more I came to see that their decision to make this bet against the financial system was very deeply rooted in either their experiences or their character or theories about financial markets. And I also came to see that if I could describe these people, I would be describing traits that really should have been present in the financial system that weren’t. It was a way of describing the financial system by describing the holes in it.
While Foster is at it, he should also listen to this, this, and this and read the original Michael Lewis Wall Street book, Liar’s Poker. Here’s the passage from Liar’s Poker that stuck with me most:
When the firm was a partnership (1910-1981) and managers had their own money in the till, loose controls sufficed. Now, however, the money didn’t belong to them but to the shareholders. And what worked for a partnership proved disastrous in a publicly owned corporation. Instead of focusing on profits, trading managers focused on revenues. They were rewarded for indiscriminate growth.
Just so we’re clear, those words were in a book that Lewis published in the late 1980s.
- David Quigg, 3/25/2011
