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Tag: leverage
STEVE EISMAN: SMART, LUCKY, ABRASIVE & NOW ONE OF THEM
I loved Michael Lewis’ book – The Big Short – about the 2008 Wall Street created global financial catastrophe, that is still impacting the little guys on Main Street eight years after it was supposedly resolved by Paulson, Bernanke and Obama. I even wrote an article about it called The Big Short: How Wall Street Destroyed Main Street. I also loved one of the main characters in the book – Frontpoint Partners hedge fund manager Steve Eisman – a foul mouthed, highly skeptical, open minded guy who figured out the fraudulent subprime mortgage scheme and shorted the crap out of the derivatives backing the fraud, making hundreds of millions in the process.
I had the opportunity to attend a 90 minute talk by Steve Eisman last night where he discussed the financial crisis, the response by the Fed and government, and the future for the financial industry. My perception of him, based on the book and movie, was he was a cantankerous asshole who didn’t care what anyone thought about him. My perception matched what I experienced. He was dropping f-bombs, insulting the institution hosting his talk, making fun of business school students (he graduated with a liberal arts degree) and dismissing any question he found to be stupid.
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Leveraged Financial Speculation to GDP in the US at a Familiar Peak, Once Again
Guest Post by Jesse
“I believe myriad global “carry trades” – speculative leveraging of securities – are the unappreciated prevailing source of finance behind interlinked global securities market Bubbles. They amount to this cycle’s government-directed finance unleashed to jump-start a global reflationary cycle.
I’m convinced that perhaps Trillions worth of speculative leverage have accumulated throughout global currency and securities markets at least partially based on the perception that policymakers condone this leverage as integral (as mortgage finance was previously) in the fight against mounting global deflationary forces.”
Doug Noland, Carry Trades and Trend-Following Strategies
The basic diagnosis is correct. But the nature of the disease, and the appropriate remedies, may not be so easily apprehended, except through simple common sense. And that is a rare commodity these days.
Like a dog returns to its vomit, the Fed’s speculative bubble policy enables the one percent to once again feast on the carcass of the real economy.
‘And no one could have ever seen it coming.’
Once is an accident.
Twice is no coincidence.
Remind yourself what has changed since then. Banks have gotten bigger. Schemes and fraud continue.
What will the third time be like? And the fourth?
Continue reading “Leveraged Financial Speculation to GDP in the US at a Familiar Peak, Once Again”