Quote:
Originally Posted by Adder
They kept an aweful lot of crap on their own books to have not been drinking the cool aid at least a bit.
And, of course, the premise of books like The Big Short is that it was only a small handful of folks who weren't drinking the cool aid pretty much up until the burst.
But it's a fair bet that there will be individuals within each bank who saw the sky falling. With hindsight, I'm sure there will be many opportunities to portray those folks as the keepers of the bank's true knowledge and belief.
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There's a doctrine of managerial science (can't recall the name right now) holding the closer people get to the top of a big organization, the less they understand about what the organization actually does. I think that's what happened with the big banks. Lewis is wrong. Everybody knew housing was a bubble. The only assholes who didn't were the high-on-hubris and utterly clueless fucks near the top, who relied on broad empirical data that masked the problem, and the assumption securitzation shielded them even though, as Adder noted, they held a bunch of shit mortgage paper on their own books.*
We all know more people in finance than we need to. And most have the same blind faith in data. They're usually right. But when they're wrong, it's a fucking mess because they're all in. Herds, etc... This happens when the only places you spend your time at are golf courses, high end restaurants, the office and vacations, and the only people you spend your time with are people exactly like, or socially even more isolated, than you.
I have friends in finance who've told me for months that we've absorbed unemployment and it doesn't mean shit - that domestic consumption will rise enough without the unemployed. They don't realize, probably because they don't give a fuck to do so, that the unemployed are only half the problem. The American two child family with $50-70k in income is fucked. They aren't spending shit and won't be doing so because persistent slow but insidious inflation in the cost of necessities (fuel, communication, rent, etc...) is fucking them. The data doesn't explain this. The data's broad and the headline's "Deflation!" Ten months from now, when we're wondering why 2011 was economically flat as Death Valley, they'll say the same thing they say every time they're wrong: "This is contrary to the projections and data."
*If you read enough about how self-isolated and dogmatic Stan O"Neal was on the subject, you could reach the conclusion the man suffered from a form of early onset dementia. Stunningly stupid barely describes his double down then double down again approach.
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