The big banks were run by idiots but not fools. They had us over a barrel - where if they were allowed to fail we all would have suffered. So their greed and cupidity was rewarded with the bailouts. Has anything really changed? The only difference was that in the lead up to the subprime crisis home prices reacted to declining credit standard and cheap loans. Now private equity ghouls are permitted to buy up single family homes; helping to price normal Americans out of the housing market.
We should have let the banks as they stood fail and prosecuted the people in charge for fraud. We should have created new banks out of the wreckage and pushed all of the players who created the crisis off the board as a warning to anyone willing to head us in this same direction again. The government could have given the same guarantees to new banks as it did to the old.
Instead we let certain banks fail, consolidated them with other major players in the market giving those banks even more control over the financial system. We basically rewarded the ones with the right political connections with the assets of the the ones without and then propped up those banks with the capital of the taxpayer to avoid them being overwhelmed by all the liabilities they created with their financial fuckery.
That no one of consequence was ever prosecuted for the fraud that was perpetrated is a clear indicator of how corrupt our government is and how we exist in a two tier system where the poor get sent to jail for minimal offenses, but you can demolish the world economy, causing innumerable horrid ripple effects and get away scot-free.
Every time I see that smug piece of garbage Jamie Dimon in the news I'm reminded of this whole debacle.
My banks have been sold so many times, I walk in and ask the teller, "What is our name today?" The only one that hasn't changed its name is USAA and that is an insurance company. Sigh. Doesn't make one bubble with confidence.
Also, getting pretty tired of the condition the bills they dispense are in. The whole industry is in an electronic haze.
Janet Yellen, who would have been the signatory of Series 2021, seems to have only had engraved plates for the $1 and $5 bills. You can't find a $10, $20, $50 or $100 that is signed by her. You will only see Series 2017, signed by Steven Mnuchen and earilier (Series 2013, Series 2009,...) She must have been too busy.
This is always the saddle excuse. But how, honestly, really, how would "We ALL" have suffered in any kind of enduring fashion. The economy would have experienced some pain for a couple of years, but, across the board, and especially in terms of brett, the American citizenry would be much more prosperous now had they just "blown everything up" like they did with the Savings and Loans in the 90s
I was quite puzzled by their letting Lehman fail. In retrospect, the political protection makes sense. Their 'financial fuckery' was nothing more than a high stakes gambling problem complete with a net and zero accountability.
Yup, and, not that I think it fully explains the housing crisis, but how many of those properties are on AIrBnB, VRBO, etc., and are part and parcel of the elite lifestyle? Just anecdotally, I know a lawyer that has a nice house in the Seattle area, but spends the winter months moving between monthly vacation rentals in Palm Springs, Sun Valley, etc. Nice lifestyle if you can afford it. Meanwhile, the rest of the labor force that supports that lifestyle (e.g., the folks who clean or maintain the vacation rental) are priced out any housing in the surrounding area.
"They had us over a barrel - where if they were allowed to fail we all would have suffered." True enough, although I'd be remiss not to point out that most of the nation has suffered right up to our current situation. The massive money printing campaign that the Federal Reserve initiated to help "fix" the crisis, through 18+ years of inflation, has effectively stolen more value from citizens than a crash ever would have.
Exactly. This was all done to save the Jamie Dimons' of the world from becoming box dwellers on the side of the road. The system was designed around risk, and when you remove consequences of risk, you create the oligarchy we have today. If you had let the banks fail, the Pharma industry, the military complex, and the health conglomerates all would have fallen, and free market would have prevailed. Would it have taken a decade? Perhaps, but anybody that thinks we are in better shape today... I'd like to talk to you about a great futures opportunity I am thinking of selling.....
I went to B school during the subprime meltdown. Things like Credit Default Swaps and Collateralized Debt Obligations seemed so complex at first. I thought you’d need a PhD to understand them. I soon learned how simple these things were. That was my biggest takeaway: You don’t need to be a genius to understand finance. To succeed in it, you just have to be willing to abuse the system. The LIBOR scam was another great example of the moral hazards that abound in the industry.
any system that allows them to put the risk on a third party makes abuse a certainty. The type of person who goes into this business is not likely to look at anything though any other lens than personal gain
I felt the same way in B school about finance made needlessly complicated. Coming from an Engineering background, I sat in class thinking we’ve just spent 3 weeks on interest rate formula, the kind of topic I was used to covering in a few days. I almost fell out of my chair with boredom. As an aside, I felt B school was mostly a sham, business courses taught by professors that had no idea how to start, run and manage a business, and would try and dissect entrepreneurial ventures like looking at bugs under a microscope. I had to learn the hard way how to survive in startups and growing a self funded business.
I'd be interested to know why you switched from engineering to business. I come from a large family of engineers, and I can't imagine any one of them doing anything else. Smart people tend to remain smart and wear those engineering degrees like the accomplishment that they are.
Started with some wrong turns out of college with a mechanical engineering degree in the early 1980s, taking a job in a dying industry, nuclear power. Construction shutdowns along with the 1982- 83 recession was brutal, and while I relocated to the silicon valley area, crossover was nearly impossible. I was able to move from power to defense, but the job was lackluster, the work unchallenging. I thought, wrongly, an MBA would be a career booster, and believed that BS. I left the MBA program before finishing, recognized I made a huge 36 credit hour mistake, and focused on learning programming, and leading edge engineering tools like solid model, just emerging. And again, by late 1980s, defense was dying, and lay-offs swept through. I was burned out on engineering. Through all the entrepreneurial contacts and projects, I crossed over to semiconductor companies in product marketing, which was a huge learning curve. Turned out, I could have got a masters in engineering the pushed my skills into electronics and or programming in the time I wasted on the MBA.
Also, I was completely unprepared for the post graduation mental shift. The banal existence of the corporate world was a complete shock to my system, having grown up in a small business from age 12 where I was training and supervising work crews by age 16. Except for startup situations, entry level positions in large corporations are narrowly focused in job scope, and the way advancement metrics operated. I wasn’t prepared for that. I actually had a lead engineer on my first job tell me to slow down my work output and admonished me for making others in the department look bad.
Certainly, I gave up too early on engineering and pushed myself into the business side, and then changed careers twice after that. Something I regret. My own fault really.
Good ol’Warren. Bought the railroad in North Dakota to ship all of the oil from the oil fields to the refineries. He then lobbied heavily and brown nosed Obama to have the keystone pipeline shut down. Heck of a man. Still lives in his old Omaha house. Don’t mention his huge California mansion on the beach. Was married to the same woman until she passed away. But they lived separate lives and Warren and his girl friends did what they did. The old adage was true - It’s cheaper to keep her. At least for Warren. Ask his buddy Billy G.
Buffett also put 40 some odd billion in the Gates foundation. I hate it when the ultra rich abuse nonprofit status for the tax purposes and political influence pedaling.
I’m sure ol Warren’s relationship with Bill Gates had nothing to do with his arbitrage play on activision blizzard had nothing to do with inside info regarding Microsoft’s acquisition of the company. It was such an out of character investment for him.
Mr Salzman— wondering if you could put together a timeline of not only 2008 meltdowns— but also timeline what took place with the Libor manipulations— I believe this was around 2012?
I'll put something together. I actually did a lot of work on Libor...actually a different conspiracy that was actually much greater than the one that took place during the 2008 crisis.
I’d also like to see some expansion on the government legislation circa 1999 from Maxine Waters and Barney Frank that allowed mortgage applicants to list unverified income and required lenders to accept the applicant’s numbers. It’s impossible to have a discussion of the 2008 financial crisis without tracing the roots back to how the subprime industry became flooded with bad loans.
He had just bought a large railroad and was making a killing. The pipeline would have made oil cheaper and left him hanging. Hence his big support for Obama and killing the pipeline. Should have never happened. Biden did his best to make it un fixable caving to the green energy tycoons.
I really don’t blame businesses or industry contacting members of Congress to push for their personal agenda. I do however despise those in government who make their decisions based on how it helps their own agenda and finances rather than the country or their constituents.
Then I will have to repeat this from my above reply on a comment:
Janet Yellen, who would have been the signatory of Series 2021, seems to have only had engraved plates for the $1 and $5 bills. You can't find a $10, $20, $50 or $100 that is signed by her. You will only see Series 2017, signed by Steven Mnuchen and earilier (Series 2013, Series 2009,...) She must have been too busy.
Yellen, in her own little way, was foisting monetary electronic nirvana for (???)
I agree, the "Friends in High Places" factor kills us. I am glad they can't touch heaven!
During the worst of the crisis In the fall of 2008, the government and the bank mob had no choice but to do the machinations they did, not only to keep the banks solvent, but to prevent the blatantly fraudulent mortgage derivatives scheme from taking the dollar to zero, and causing genuine mass anarchy nationwide.
HOWEVER, after the initial bailouts were done and things were generally stabilized (at the life-altering expense of every American citizen) the new presidential administration had one effective remedy available to keep this nightmare scenario from ever happening again. They just needed to prosecute a couple of investment bank CEOs for fraud.
HOWEVER, the newly elected president, in a 2009 interview when asked why no prosecutions had been undertaken, said, in so many words, ‘We looked at this, but what these guys did was not illegal.’ WTF.
So because of this craven choice not to prosecute, the country has been living on accelerating debt accumulation and financial borrowed time ever since. Integrity does matter.
It will be interesting to watch the monetary jiujitsu that ends up paying for Obama's South Chicago Presidential Center (that is Not a library!). Budgeted at $450M, today's bloat stands at an estimated $800M. The "wheels are falling off."
I would expect nothing less of anything larger than a lemonade stand built in Illinois. We Illinoisans take our fiscal irresponsibility seriously. For years, we didn't even bother with a state budget. Pritker fixed that; we now have budgets, but they're billions out of balance routinely. A bit of light reading on Obama's unusual rocket from a small-time community organizer to the White House gives a glimpse into our politics. We've jailed a record number of governors, and the ex-speaker has been convicted of numerous felonies, yet still, not even a court date set for sentencing.
I hear you. How many years ago was I reading about Chicago's (or IL's) school pension fund program being bankrupt? Too long ago. People use to say "hand caught in the cookie jar." I changed it to "arm caught in the cookie jar."
Have WE the tax payer ever been paid back for these bail outs? I think we all know that answer. The airlines owe us. GM owes us. It’s amazing how successful whole sections of an economy can be when it’s using someone else’s money and never has to pay it back. The airline one is especially one that pisses me off as airfares haven’t become cheaper and the service has gotten worse and we are nickled and dimed for everything. Have to hand it to our leaders of this capitalist society because once you’re deemed “too big to fail” the govt won’t let you die when it’s exactly what they should have let happen as none of them have learned the lesson that created the mess in the first place.
2007 - I remember I just got engaged, and got on a plane to meet my future in-laws. Picked up a copy of BusinessWeek just before boarding and they laid out the huge risk from Mortgage Back Securities - conclusion it should be OK - the Finance guys are smart. It wasn't OK, and every risk they outlined became real - 10x. I worked at Risk for a Bank for a few years - and the problem is these places get quarterly bonuses - you could make generational wealth in a couple of quarters, and who cares if you get laid off if the deals take down the bank.
I'm a conservative GenXer. I've done OK, and thinking about early retirement. But for my entire adult life - it has been hand outs to corporations. Tax cuts and subsidies, bail outs and all I've seen is off shoring, downsizing. Worst is Private Equity decimation - bankruptcy in 10years. Wave after wave. With Buffet being the smiling face of this dystopia.
The only thing I like about Trump's tariffs - tired of the carrots - it's time for the stick. To be honest jail time should not be ruled out. Cope with it...
Great article. One other twist, Buffett caused the 2008 financial debacle. He obviously wasn't alone, but without Moody's rating fake bonds AAA, the debacle doesn't happen. Moody's gets paid on volume and was the straw that stirred the drink. Berkshire owns 100% of Moody's. Do we think Buffett didn't understand how Moody's made money when he bought it?
Well done Eric. Yep... I've always had my doubts about Warren Buffet. Porter Stansberry has done a lot of excellent work analyzing his investments and it shows that he is not the talented investor that some would hold him out to be.
God bless Warren, he's always been a bit of a fraud. But that's probably what happens to anyone that far up the food chain. I remember his rant about his secretary paying more taxes than he did, like he was pleading for Tiny Tim to get her surgery. He never mentioned the fact that his lowly secretary made $350k/year, more than 99% of the general public.
Or the time he exerted gentle pressure to shutdown the Keystone Pipeline, putting thousands out of work and pushing up gas prices (something I'm sure didn't worry him while driving his old 2016 Cadillac (purchased though the GM employee program) and eating his Sausage McMuffin, drinking his Coke. And wouldn't you know it, he dropped hundreds of thousand into democratic coffers and his BNSF railroad picked up the slack hauling all that oil to market. Since it costs roughly twice as much to haul by train rather than pipeline, guess who picked up the slack?
What a guy!! And thrifty to boot. Still living in that beautiful little house, with that beautiful little wife, driving that beautiful car. MY GOD, WHAT HAVE I DONE??
Excellent anecdote. Even Warren. Surprising? No. Michael Lewis couldn’t tell that story without hero’s and vapid villains but truth is subtler. Man is greedy. Who in a meeting votes against soaring profits? From government to banking, to insurance to hospitals profit motive is the issue. The unanswerable question is always: how much is too much?
I agree with Eric’s assessment wholeheartedly. I would also add, however, that such abuses do not absolve borrowers of the responsibility to do their own due diligence on how much money they borrow and how much house they can afford. There is sufficient blame for the sub-prime crisis to be distributed to everyone who temporarily benefited from overly-easy credit, including greedy consumers.
The big banks were run by idiots but not fools. They had us over a barrel - where if they were allowed to fail we all would have suffered. So their greed and cupidity was rewarded with the bailouts. Has anything really changed? The only difference was that in the lead up to the subprime crisis home prices reacted to declining credit standard and cheap loans. Now private equity ghouls are permitted to buy up single family homes; helping to price normal Americans out of the housing market.
We should have let the banks as they stood fail and prosecuted the people in charge for fraud. We should have created new banks out of the wreckage and pushed all of the players who created the crisis off the board as a warning to anyone willing to head us in this same direction again. The government could have given the same guarantees to new banks as it did to the old.
Instead we let certain banks fail, consolidated them with other major players in the market giving those banks even more control over the financial system. We basically rewarded the ones with the right political connections with the assets of the the ones without and then propped up those banks with the capital of the taxpayer to avoid them being overwhelmed by all the liabilities they created with their financial fuckery.
That no one of consequence was ever prosecuted for the fraud that was perpetrated is a clear indicator of how corrupt our government is and how we exist in a two tier system where the poor get sent to jail for minimal offenses, but you can demolish the world economy, causing innumerable horrid ripple effects and get away scot-free.
Every time I see that smug piece of garbage Jamie Dimon in the news I'm reminded of this whole debacle.
My banks have been sold so many times, I walk in and ask the teller, "What is our name today?" The only one that hasn't changed its name is USAA and that is an insurance company. Sigh. Doesn't make one bubble with confidence.
Also, getting pretty tired of the condition the bills they dispense are in. The whole industry is in an electronic haze.
Janet Yellen, who would have been the signatory of Series 2021, seems to have only had engraved plates for the $1 and $5 bills. You can't find a $10, $20, $50 or $100 that is signed by her. You will only see Series 2017, signed by Steven Mnuchen and earilier (Series 2013, Series 2009,...) She must have been too busy.
This is always the saddle excuse. But how, honestly, really, how would "We ALL" have suffered in any kind of enduring fashion. The economy would have experienced some pain for a couple of years, but, across the board, and especially in terms of brett, the American citizenry would be much more prosperous now had they just "blown everything up" like they did with the Savings and Loans in the 90s
I was quite puzzled by their letting Lehman fail. In retrospect, the political protection makes sense. Their 'financial fuckery' was nothing more than a high stakes gambling problem complete with a net and zero accountability.
Yup, and, not that I think it fully explains the housing crisis, but how many of those properties are on AIrBnB, VRBO, etc., and are part and parcel of the elite lifestyle? Just anecdotally, I know a lawyer that has a nice house in the Seattle area, but spends the winter months moving between monthly vacation rentals in Palm Springs, Sun Valley, etc. Nice lifestyle if you can afford it. Meanwhile, the rest of the labor force that supports that lifestyle (e.g., the folks who clean or maintain the vacation rental) are priced out any housing in the surrounding area.
"They had us over a barrel - where if they were allowed to fail we all would have suffered." True enough, although I'd be remiss not to point out that most of the nation has suffered right up to our current situation. The massive money printing campaign that the Federal Reserve initiated to help "fix" the crisis, through 18+ years of inflation, has effectively stolen more value from citizens than a crash ever would have.
Exactly. This was all done to save the Jamie Dimons' of the world from becoming box dwellers on the side of the road. The system was designed around risk, and when you remove consequences of risk, you create the oligarchy we have today. If you had let the banks fail, the Pharma industry, the military complex, and the health conglomerates all would have fallen, and free market would have prevailed. Would it have taken a decade? Perhaps, but anybody that thinks we are in better shape today... I'd like to talk to you about a great futures opportunity I am thinking of selling.....
Really? I'm in the market for a nice little beachside cottage in North Dakota, or short of that, perhaps a bridge....
I'm not into real estate. I have these beans that grow to immense size!!!
Maybe just call it transportation infrastructure located in Brooklyn.
I'm over that, I heard from a guy that there were immense opportunities with nearly no risk in beans.
OMG! Beans?! Sign me up. How would I offload the risk?
"if they were allowed to fail we all would have suffered."
Are you under the impression we all didn't suffer because we did bail them out?!
I went to B school during the subprime meltdown. Things like Credit Default Swaps and Collateralized Debt Obligations seemed so complex at first. I thought you’d need a PhD to understand them. I soon learned how simple these things were. That was my biggest takeaway: You don’t need to be a genius to understand finance. To succeed in it, you just have to be willing to abuse the system. The LIBOR scam was another great example of the moral hazards that abound in the industry.
any system that allows them to put the risk on a third party makes abuse a certainty. The type of person who goes into this business is not likely to look at anything though any other lens than personal gain
I felt the same way in B school about finance made needlessly complicated. Coming from an Engineering background, I sat in class thinking we’ve just spent 3 weeks on interest rate formula, the kind of topic I was used to covering in a few days. I almost fell out of my chair with boredom. As an aside, I felt B school was mostly a sham, business courses taught by professors that had no idea how to start, run and manage a business, and would try and dissect entrepreneurial ventures like looking at bugs under a microscope. I had to learn the hard way how to survive in startups and growing a self funded business.
I'd be interested to know why you switched from engineering to business. I come from a large family of engineers, and I can't imagine any one of them doing anything else. Smart people tend to remain smart and wear those engineering degrees like the accomplishment that they are.
Started with some wrong turns out of college with a mechanical engineering degree in the early 1980s, taking a job in a dying industry, nuclear power. Construction shutdowns along with the 1982- 83 recession was brutal, and while I relocated to the silicon valley area, crossover was nearly impossible. I was able to move from power to defense, but the job was lackluster, the work unchallenging. I thought, wrongly, an MBA would be a career booster, and believed that BS. I left the MBA program before finishing, recognized I made a huge 36 credit hour mistake, and focused on learning programming, and leading edge engineering tools like solid model, just emerging. And again, by late 1980s, defense was dying, and lay-offs swept through. I was burned out on engineering. Through all the entrepreneurial contacts and projects, I crossed over to semiconductor companies in product marketing, which was a huge learning curve. Turned out, I could have got a masters in engineering the pushed my skills into electronics and or programming in the time I wasted on the MBA.
Also, I was completely unprepared for the post graduation mental shift. The banal existence of the corporate world was a complete shock to my system, having grown up in a small business from age 12 where I was training and supervising work crews by age 16. Except for startup situations, entry level positions in large corporations are narrowly focused in job scope, and the way advancement metrics operated. I wasn’t prepared for that. I actually had a lead engineer on my first job tell me to slow down my work output and admonished me for making others in the department look bad.
Certainly, I gave up too early on engineering and pushed myself into the business side, and then changed careers twice after that. Something I regret. My own fault really.
Good ol’Warren. Bought the railroad in North Dakota to ship all of the oil from the oil fields to the refineries. He then lobbied heavily and brown nosed Obama to have the keystone pipeline shut down. Heck of a man. Still lives in his old Omaha house. Don’t mention his huge California mansion on the beach. Was married to the same woman until she passed away. But they lived separate lives and Warren and his girl friends did what they did. The old adage was true - It’s cheaper to keep her. At least for Warren. Ask his buddy Billy G.
Buffett also put 40 some odd billion in the Gates foundation. I hate it when the ultra rich abuse nonprofit status for the tax purposes and political influence pedaling.
I live in Omaha and we have to put up with the annual meeting every year. The guy is idolized here.
The College World Series is WAY more fun.
I lived there for 27 years. CWS is the best.
It was her choice to live separate lives I thought? She left him, he was devastated.
No doubt a guy who spends all day reading Moody's reports can be a bit difficult to live with but it's not like he was running around on her.
05/20/25: Could there possibly be any subject more boring than the personal life of Warren Buffet?
My personal life?
!!! (Oh, come now, we know that you're the illegitimate son of Talleyrand. Don't be so modest...)
He and my great great great great grand pappy were like homies.
05/20/25: Yes, I fondly remember his essay on "Why Trump Invaded Russia in 1812" (mainly because I ghost-wrote it myself).
How to get filthy rich: gamble with other people's money.
I’m sure ol Warren’s relationship with Bill Gates had nothing to do with his arbitrage play on activision blizzard had nothing to do with inside info regarding Microsoft’s acquisition of the company. It was such an out of character investment for him.
Goodness, I learned something today!!!
Mr Salzman— wondering if you could put together a timeline of not only 2008 meltdowns— but also timeline what took place with the Libor manipulations— I believe this was around 2012?
Many thanks for all your work at Racket
I'll put something together. I actually did a lot of work on Libor...actually a different conspiracy that was actually much greater than the one that took place during the 2008 crisis.
Please do. I'm fairly ignorant of Libor and am in the mood for a little more outraged depression. This was great work BTW.
I’d also like to see some expansion on the government legislation circa 1999 from Maxine Waters and Barney Frank that allowed mortgage applicants to list unverified income and required lenders to accept the applicant’s numbers. It’s impossible to have a discussion of the 2008 financial crisis without tracing the roots back to how the subprime industry became flooded with bad loans.
Don't forget Chris Dodd.
Maxine Waters writing any legislation that may affect my life makes me ill.
She actually can't "write". But, spew from her piehole? Now that she can do...
I remember something about Buffet’s oil shipping trains vs a more efficient pipeline; it pays to be Warren.
He had just bought a large railroad and was making a killing. The pipeline would have made oil cheaper and left him hanging. Hence his big support for Obama and killing the pipeline. Should have never happened. Biden did his best to make it un fixable caving to the green energy tycoons.
I really don’t blame businesses or industry contacting members of Congress to push for their personal agenda. I do however despise those in government who make their decisions based on how it helps their own agenda and finances rather than the country or their constituents.
It helps to have the US Treasury Secretary on your speed dial.
Then I will have to repeat this from my above reply on a comment:
Janet Yellen, who would have been the signatory of Series 2021, seems to have only had engraved plates for the $1 and $5 bills. You can't find a $10, $20, $50 or $100 that is signed by her. You will only see Series 2017, signed by Steven Mnuchen and earilier (Series 2013, Series 2009,...) She must have been too busy.
Yellen, in her own little way, was foisting monetary electronic nirvana for (???)
I agree, the "Friends in High Places" factor kills us. I am glad they can't touch heaven!
"It helps to have the US Treasury Secretary on your speed dial."
I have to disagree: he hasn't helped me one fucking iota to this point- the bastard!
During the worst of the crisis In the fall of 2008, the government and the bank mob had no choice but to do the machinations they did, not only to keep the banks solvent, but to prevent the blatantly fraudulent mortgage derivatives scheme from taking the dollar to zero, and causing genuine mass anarchy nationwide.
HOWEVER, after the initial bailouts were done and things were generally stabilized (at the life-altering expense of every American citizen) the new presidential administration had one effective remedy available to keep this nightmare scenario from ever happening again. They just needed to prosecute a couple of investment bank CEOs for fraud.
HOWEVER, the newly elected president, in a 2009 interview when asked why no prosecutions had been undertaken, said, in so many words, ‘We looked at this, but what these guys did was not illegal.’ WTF.
So because of this craven choice not to prosecute, the country has been living on accelerating debt accumulation and financial borrowed time ever since. Integrity does matter.
It will be interesting to watch the monetary jiujitsu that ends up paying for Obama's South Chicago Presidential Center (that is Not a library!). Budgeted at $450M, today's bloat stands at an estimated $800M. The "wheels are falling off."
You are so right! It is craven. Perfect.
I would expect nothing less of anything larger than a lemonade stand built in Illinois. We Illinoisans take our fiscal irresponsibility seriously. For years, we didn't even bother with a state budget. Pritker fixed that; we now have budgets, but they're billions out of balance routinely. A bit of light reading on Obama's unusual rocket from a small-time community organizer to the White House gives a glimpse into our politics. We've jailed a record number of governors, and the ex-speaker has been convicted of numerous felonies, yet still, not even a court date set for sentencing.
Ha! Now we have state budgets that fund every leftist dream, with the goal of launching Gov. P to the White House.
Actually making Gov. P the President might be brilliant — no doubt people will flee D.C. at the same rate people are fleeing The Land of Lincoln.
I hear you. How many years ago was I reading about Chicago's (or IL's) school pension fund program being bankrupt? Too long ago. People use to say "hand caught in the cookie jar." I changed it to "arm caught in the cookie jar."
https://www.architecture.org/online-resources/stories-of-chicago/what-you-need-to-know-about-the-obama-presidential-center
The lemonade stand, the people get lemons.
Have WE the tax payer ever been paid back for these bail outs? I think we all know that answer. The airlines owe us. GM owes us. It’s amazing how successful whole sections of an economy can be when it’s using someone else’s money and never has to pay it back. The airline one is especially one that pisses me off as airfares haven’t become cheaper and the service has gotten worse and we are nickled and dimed for everything. Have to hand it to our leaders of this capitalist society because once you’re deemed “too big to fail” the govt won’t let you die when it’s exactly what they should have let happen as none of them have learned the lesson that created the mess in the first place.
2007 - I remember I just got engaged, and got on a plane to meet my future in-laws. Picked up a copy of BusinessWeek just before boarding and they laid out the huge risk from Mortgage Back Securities - conclusion it should be OK - the Finance guys are smart. It wasn't OK, and every risk they outlined became real - 10x. I worked at Risk for a Bank for a few years - and the problem is these places get quarterly bonuses - you could make generational wealth in a couple of quarters, and who cares if you get laid off if the deals take down the bank.
I'm a conservative GenXer. I've done OK, and thinking about early retirement. But for my entire adult life - it has been hand outs to corporations. Tax cuts and subsidies, bail outs and all I've seen is off shoring, downsizing. Worst is Private Equity decimation - bankruptcy in 10years. Wave after wave. With Buffet being the smiling face of this dystopia.
The only thing I like about Trump's tariffs - tired of the carrots - it's time for the stick. To be honest jail time should not be ruled out. Cope with it...
Great article. One other twist, Buffett caused the 2008 financial debacle. He obviously wasn't alone, but without Moody's rating fake bonds AAA, the debacle doesn't happen. Moody's gets paid on volume and was the straw that stirred the drink. Berkshire owns 100% of Moody's. Do we think Buffett didn't understand how Moody's made money when he bought it?
Well done Eric. Yep... I've always had my doubts about Warren Buffet. Porter Stansberry has done a lot of excellent work analyzing his investments and it shows that he is not the talented investor that some would hold him out to be.
God bless Warren, he's always been a bit of a fraud. But that's probably what happens to anyone that far up the food chain. I remember his rant about his secretary paying more taxes than he did, like he was pleading for Tiny Tim to get her surgery. He never mentioned the fact that his lowly secretary made $350k/year, more than 99% of the general public.
Or the time he exerted gentle pressure to shutdown the Keystone Pipeline, putting thousands out of work and pushing up gas prices (something I'm sure didn't worry him while driving his old 2016 Cadillac (purchased though the GM employee program) and eating his Sausage McMuffin, drinking his Coke. And wouldn't you know it, he dropped hundreds of thousand into democratic coffers and his BNSF railroad picked up the slack hauling all that oil to market. Since it costs roughly twice as much to haul by train rather than pipeline, guess who picked up the slack?
What a guy!! And thrifty to boot. Still living in that beautiful little house, with that beautiful little wife, driving that beautiful car. MY GOD, WHAT HAVE I DONE??
Excellent anecdote. Even Warren. Surprising? No. Michael Lewis couldn’t tell that story without hero’s and vapid villains but truth is subtler. Man is greedy. Who in a meeting votes against soaring profits? From government to banking, to insurance to hospitals profit motive is the issue. The unanswerable question is always: how much is too much?
Anything more than $2million net worth 😊
I agree with Eric’s assessment wholeheartedly. I would also add, however, that such abuses do not absolve borrowers of the responsibility to do their own due diligence on how much money they borrow and how much house they can afford. There is sufficient blame for the sub-prime crisis to be distributed to everyone who temporarily benefited from overly-easy credit, including greedy consumers.