"....a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000."

The End

by Michael Lewis Nov 11 2008

The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.

Found this via Clusterstock. Lots of great quotes in this, a good read.

“The single greatest line I ever wrote as an analyst,” says Eisman, “was after Lomas said they were hedged.” He recited the line from memory: “ ‘The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment.’ I enjoyed writing that sentence more than any sentence I ever wrote.” A few months after he’d delivered that line in his report, Lomas Financial returned to bankruptcy.

In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

“With all due respect, sir,” Daniel told the C.E.O. deferentially as they left the meeting, “you’re delusional.” This wasn’t Fitch or even S&P. This was Moody’s, the aristocrats of the rating business, 20 percent owned by Warren Buffett. And the company’s C.E.O. was being told he was either a fool or a crook by one Vincent Daniel, from Queens.

Truth to tell, there wasn’t a whole lot of hand-wringing inside FrontPoint either. The only one among them who wrestled a bit with his conscience was Daniel. “Vinny, being from Queens, needs to see the dark side of everything,” Eisman says. To which Daniel replies, “The way we thought about it was, ‘By shorting this market we’re creating the liquidity to keep the market going.’ ” “It was like feeding the monster,” Eisman says of the market for subprime bonds. “We fed the monster until it blew up.”

I've just started reading that "1421" book about how the Chinese discovered the world. Apparently even back then they liked to sell their goods cheap and on easy credit to their trade partners, who were thus kept indebted and presumably also hooked on the nice cheap cobalt-blue porcelain and so forth. Maybe the Chinese invented "feeding the monster". I wish they would learn Spanish before they take over the world. Spanish, while not the most beautiful-sounding language (neither is English by any means) has the remarkable advantage of having an exact correspondence between how it is spelled and how it sounds (excepting my beloved Argentines, who have to do everything in their own style including speak Spanish). There are plenty of highly intelligent people who sound like idiots if they write anything because they are not wired to remember the arbitrary and capricious, not to say cruel and unusual, relation of lack thereof between spoken and written English (I do have such hardware, but would much rather have hardware suitable for Quantum Gravity that Goddamn English spelling). Chinese, being a tone-system language and not even standardised within China as far as I know, is singularly unsuitable for the role of universal language (except for the fact that billions of Chinese already speak it, of course). I suspect that Western Barbarians such as myself are lacking the hardware to properly learn Chinese even had I been born there. So please learn Spanish, Chinese, before you take over what is left of the world after the current bunch of schmucks get done f*cking it up.