How to Guarantee a Meltdown

June 27, 2014

Just keep doing the same thing you did that caused the last one.

And if the people who bailed you out say you have to follow new rules, make sure those rules never get put into effect.  Witness the latest on derivatives regulation from our esteemed Congress:

By the way, I wrote the article.


Book on the Way

June 26, 2014

After a long hiatus, I’m back.

I worked on a very interesting project to hedge commercial real estate while I was gone – a project that the market needed. Sadly, complacence and the pressure of “money to be made” took over and the new hedge product didn’t get implemented.

‘Twas ever thus.

When Wall Street is making tons of money doing something, the various companies on the Street all crank up the volume as much as they can. Everyone who has the skills and specialized knowledge to execute the “hot” business is working flat out, and new people are being trained as quickly as possible. Each firm thinks it can do a bit better than its competition. Better means more profits, more volume, and strangely enough, lower risk. They can’t all be right, but don’t try to tell them.

My book will be different from the others on the crisis because it will show how the people who drove that extraordinary volume ($600 billion of new subprime mortgages per year at the peak) felt they were personally not going to pay a terrible price for taking on such large risks. Come to think of it, they were right.

The terrible price was spread to everyone, especially to homeowners across America.