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A story of mass delusion on Wall Street
Monday, March 15, 2010
Michael Lewis was on 60 Minutes talking about the financial market meltdown and his new book that hits bookstores today - The Big Short: Inside the Doomsday Machine.
Favorite comment: "Wall Street is able to delude itself because it gets paid to delude itself ... If you pay someone not to see the truth, they will not see the truth."
On AIG and Goldman Sachs: "They insured tens of billions of dollars of subprime mortgage loans without even knowing they were doing it. Goldman Sachs persuaded them to insure these piles of loans without them ever investigating what was in the pile. So, there's an additional level of incompetence here - they didn't even know the mistake that they were making."
And a closing thought from Steve Kroft: "Lewis believes the financial industry is living in a world so disconnected from American life that it can't be sustained. He thinks it may take a while, but he believes that Wall Street as we know it has done itself in."
3 comments:
Lewis is the best but is only scratching the surface. The whole financial services industry is a ripoff with brokers on commission, advisors getting paid excessive amounts,and maniacs on tv touting their positions. Bogle et. al. are right - most people should go into low cost, minimal trading index funds if they want to retire in comfort. The financial services industry puffs itself up with the word "fiduciary". It's a joke.
Brokers are still telling people that the market "historically returns 10%".
The last 10 years, the return has actually been a negative 1% a year.
Lewis has been using that money line since the '87 crash. Perhaps he is right this time. However, 23 years later, and Lewis is still waiting.
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