Forget Gordon Gekko BS...here's the real thing. Watch all 6 trailers- "Inside Job." Mishkin is embarrassing.
The movie's thesis seems to be that the whole housing crisis/meltdown was engineered. This, I believe, is way off base. Were a lot of people stupid? Sure. Were there a lot of bad/illegal things done? Surely.
But was there a gigantic conspiracy? Hardly. Consider this:
The new owners loaded up with so much debt—$2.9 billion from Wachovia, $1.4 billion from Merrill Lynch (BAC)—that there was no room for error. They didn't expect the property to be cash-flow positive until 2011, according a private placement memorandum. Until then, they planned to cover interest payments—$262 million in the first year alone—from a reserve fund Verrone had arranged. Source: The Ballad of "Large Loan Verrone," Bloomberg/BusinessWeek.
Note that one of the owners was BlackRock--a huge player in the capital markets. The problem was the age-old problem of excessive arrogance, hubris, and greed. It wasn't a case of an elite group deliberately setting out to bring the system down.
At least, that's my take.
Thoughts and observations for those investing on their own or contemplating doing it themselves.
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Sunday, September 19, 2010
The Real Thing
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It's hard to comment on a movie without having seen it. But the financial meltdown was hardly a conspiracy, unless you call the partnering of government (Congress, The Administration, The Fed, The Treasury, The SEC) and the bankers and Wall Street to try to juice the home ownership market a conspiracy. To me it is more like a story of incompetence, greed, hubris, and arrogance run awry. Some might call it crony capitalism. But it was not a vast conspiracy by either the right or the left to destroy the system.ReplyDelete