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65d3b8e
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BAFU. Billions and All Fucked Up.
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Michael Lewis |
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6e3b2de
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Russians had a reputation for being the best programmers on Wall Street, and Serge thought he knew why: They had been forced to learn to program computers without the luxury of endless computer time. Many years later, when he had plenty of computer time, Serge still wrote out new programs on paper before typing them into the machine. "In Russia, time on the computer was measured in minutes," he said. "When you write a program, you are given..
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Michael Lewis |
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951ffab
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Belief in the Law of Small Numbers" teased out the implications of a single mental error that people commonly made--even when those people were trained statisticians. People mistook even a very small part of a thing for the whole. Even statisticians tended to leap to conclusions from inconclusively small amounts of evidence. They did this, Amos and Danny argued, because they believed--even if they did not acknowledge the belief--that any gi..
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Michael Lewis |
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25fd56a
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But if you worry about everything, you wind up worrying about nothing.
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Michael Lewis |
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3ede4f5
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Isocrates: "Democracy destroys itself because it abuses its right to freedom and equality. Because it teaches its citizens to consider audacity as a right, lawlessness as a freedom, abrasive speech as equality, and anarchy as progress."
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Michael Lewis |
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5c5918f
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Losing shouldn't be fun. It's not fun for me. If I'm going to be miserable, you're going to be miserable.
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Michael Lewis |
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4a87f53
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What people remember about the past, they suggested, is likely to warp their judgment of the future. "We often decide that an outcome is extremely unlikely or impossible, because we are unable to imagine any chain of events that could cause it to occur. The defect, often, is in our imagination."P The"
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Michael Lewis |
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a907c55
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By changing the context in which two things are compared, you submerge certain features and force others to the surface. "It"
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Michael Lewis |
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737c3a8
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He was the person for whom the clock was always running out, the game was always tied, and the ball was always in his hands.
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Michael Lewis |
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4b13ffe
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In eight years alone--2010-2018--the DOE's National Nuclear Security Administration collected enough material to make 160 nuclear bombs. The department trains every international atomic-energy inspector; if nuclear power plants around the world are not producing weapons-grade material on the sly by reprocessing spent fuel rods and recovering plutonium, it's because of these people.
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Michael Lewis |
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83ff6f0
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The first thing Gutenberg sought to publish, after the Bible, was a laxative timetable he called a "Purgation-Calendar." Then there is the astonishing number of anal German folk sayings. "As the fish lives in water, so does the shit stick to the asshole!," to select but one of the seemingly endless examples."
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Michael Lewis |
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1c13443
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The same system that once gave us subprime mortgage collateralized debt obligations no investor could possibly truly understand now gave us stock market trades that occurred at fractions of a penny at unsafe speeds using order types that no investor could possibly truly understand.
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Michael Lewis |
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440108f
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The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him. --Leo Tolstoy, 1897
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Michael Lewis |
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1b4975f
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I have a job to do. Make money for my clients. Period. But boy it gets morbid when you start making investments that work out extra great if a tragedy occurs.
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Michael Lewis |
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bad2ca3
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People with Asperger's couldn't control what they were interested in. It was a stroke of luck that his special interest was financial markets and not, say, collecting lawn mower catalogues.
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Michael Lewis |
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4087e3d
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What's amazing is that they make a market in this fantasy stuff," said Druskin. "It's not a real asset."
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Michael Lewis |
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7866873
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The rating agencies, who were paid fat fees by Goldman Sachs and other Wall Street firms for each deal they rated, pronounced 80 percent of the new tower of debt triple-A.
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Michael Lewis |
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4cc38aa
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The source of his unhappiness was, as usual, other people.
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Michael Lewis |
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55a6468
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He walked around the Las Vegas casino incredulous at the spectacle before him: seven thousand people, all of whom seemed delighted with the world as they found it. A society with deep, troubling economic problems had rigged itself to disguise those problems, and the chief beneficiaries of the deceit were its financial middlemen.
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Michael Lewis |
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c0797b3
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In 2008 it was the entire financial system that was at risk. We were still short. But you don't want the system to crash. It's sort of like the flood's about to happen and you're Noah. You're on the ark. Yeah, you're okay. But you are not happy looking out at the flood. That's not a happy moment for Noah." By"
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Michael Lewis |
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be099c1
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This was yet another consequence of turning Wall Street partnerships into public corporations: It turned them into objects of speculation. It was no longer the social and economic relevance of a bank that rendered it too big to fail, but the number of side bets that had been made upon it.
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Michael Lewis |
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9857276
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To the untrained eye, the Wall Street people who rode from the Connecticut suburbs to Grand Central were an undifferentiated mass, but within that mass Danny noted many small and important distinctions. If they were on their BlackBerrys, they were probably hedge fund guys, checking their profits and losses in the Asian markets. If they slept on the train they were probably sell-side people--brokers, who had no skin in the game. Anyone carry..
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Michael Lewis |
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a4e6bc8
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It was in Las Vegas that Eisman and his associates' attitude toward the U.S. bond market hardened into something like its final shape. As Vinny put it, "That was the moment when we said, 'Holy shit, this isn't just credit. This is a fictitious Ponzi scheme.'" In Vegas the question lingering at the back of their minds ceased to be, Do these bond market people know something we do not? It was replaced by, Do they deserve merely to be fired, o..
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Michael Lewis |
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6cb7ce3
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When you're a conservative Republican, you never think people are making money by ripping other people off,
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Michael Lewis |
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e6b1638
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The market might have learned a simple lesson: Don't make loans to people who can't repay them. Instead it learned a complicated one: You can keep on making these loans, just don't keep them on your books. Make the loans, then sell them off to the fixed income departments of big Wall Street investment banks, which will in turn package them into bonds and sell them to investors.
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Michael Lewis |
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5dd0d2e
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Once handed the money, Paulson abandoned his promised strategy and instead essentially began giving away billions of dollars to Citigroup, Morgan Stanley, Goldman Sachs, and a few others unnaturally selected for survival.
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Michael Lewis |
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6c63ec0
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Why were they prepaying so fast? Vinny asked himself. "It made no sense to me. Then I saw that the reason the prepayments were so high is that they were involuntary."
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Michael Lewis |
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73f7918
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The line between gambling and investing is artificial and thin. The soundest investment has the defining trait of a bet (you losing all of your money in hopes of making a bit more), and the wildest speculation has the salient characteristic of an investment (you might get your money back with interest).
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Michael Lewis |
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dc913d8
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market leader in interest rate swaps. There was a natural role for a blue-chip corporation with the highest credit rating to stand in the middle of swaps and long-term options and the other risk-spawning innovations. The traits required of this corporation were that it not be a bank--and thus subject to bank regulation, and the need to reserve capital against risky assets--and that it be willing and able to bury exotic risks on its
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Michael Lewis |
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2e45d7e
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How do you explain to an innocent citizen of the free world the importance of a credit default swap on a double-A tranche of a subprime-backed collateralized debt obligation? He tried, but his English in-laws just looked at him strangely. They understood that someone else had just lost a great deal of money and Ben had just made a great deal of money, but never got much past that. "I can't really talk to them about it," he says. "They're En..
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financial-crisis
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Michael Lewis |
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7904677
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The simple measure of sanity in housing prices, Zelman argued, was the ratio of median home price to income. Historically, in the United States, it ran around 3:1; by late 2004, it had risen nationally, to 4:1. "All these people were saying it was nearly as high in some other countries," says Zelman. "But the problem wasn't just that it was four to one. In Los Angeles it was ten to one and in Miami, eight-point-five to one."
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real-estate
recession
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Michael Lewis |
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85adc96
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Household was making loans at a faster pace than ever. A big source of its growth had been the second mortgage. The document offered a fifteen-year, fixed-rate loan, but it was bizarrely disguised as a thirty-year loan. It took the stream of payments the homeowner would make to Household over fifteen years, spread it hypothetically over thirty years, and asked: If you were making the same dollar payments over thirty years that you are in fa..
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Michael Lewis |
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daaa56d
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The subprime mortgage machine was up and running again, as if it had never broken down in the first place. If the first act of subprime lending had been freaky, this second act was terrifying. Thirty billion dollars was a big year for subprime lending in the mid-1990s. In 2000 there had been $130 billion in subprime mortgage lending, and 55 billion dollars' worth of those loans had been repackaged as mortgage bonds. In 2005 there would be $..
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Michael Lewis |
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f083ee6
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Writing a check separates a commitment from a conversation. --Warren Buffett
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Michael Lewis |
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e98c89b
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After that, the men in the room rushed for the exits, apparently to sell their shares in Bear Stearns. By the time Alan Greenspan arrived to speak, there was hardly anyone who cared to hear what he had to say. The audience was gone. By Monday, Bear Stearns was of course gone, too, sold to J.P. Morgan for $2 a share.*
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Michael Lewis |
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2897afc
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These folks don't know what they're talking about. If losses go to ten percent there will be, like, a million homeless people." (Losses in the pools Hubler's group had bet on would eventually reach 40 percent.)"
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Michael Lewis |
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2535281
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Whenever Wall Street people tried to argue--as they often did--that the subprime lending problem was caused by the mendacity and financial irresponsibility of ordinary Americans, he'd
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Michael Lewis |
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a85f75b
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Why, for example, wasn't AIG required to reserve capital against them? Why, for that matter, were Moody's and Standard & Poor's willing to bless 80 percent of a pool of dicey mortgage loans with the same triple-A rating they bestowed on the debts of the U.S. Treasury? Why didn't someone, anyone, inside Goldman Sachs stand up and say, "This is obscene. The rating agencies, the ultimate pricers of all these subprime mortgage loans, clearly do..
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Michael Lewis |
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0979d25
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The less transparent the market and the more complicated the securities, the more money the trading desks at big Wall Street firms can make from the argument. The constant argument over the value of the shares of some major publicly traded company has very little value, as both buyer and seller can see the fair price of the stock on the ticker, and the broker's commission has been driven down by competition. The argument over the value of c..
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Michael Lewis |
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1a8931e
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He was like some tragic figure in Greek mythology whose offenses against the gods had caused them to design for him this exquisite torture: you must desperately need to see what you cannot bear to see.
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Michael Lewis |
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c0aa4ef
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If you are going to start a regulatory regime from scratch, you'd design it to protect middle-and lower-middle-income people, because the opportunity for them to get ripped off was so high. Instead what we had was a regime where those were the people who were protected the least." Eisman"
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Michael Lewis |
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08cbf02
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Subprime mortgage lending was still a trivial fraction of the U.S. credit markets--a few tens of billions in loans each year--but its existence made sense, even to Steve Eisman. "I thought it was partly a response to growing income inequality," he said. "The distribution of income in this country was skewed and becoming more skewed, and the result was that you have more subprime customers."
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Michael Lewis |
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c952ac8
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He wore the same shorts and t-shirts to work for days on end. He refused to wear shoes with laces. He refused to wear watches or even his wedding ring. To calm himself at work he often blared heavy metal music.
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Michael Lewis |
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c094e15
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Every form of strength covers one weakness and creates another, and therefore every form of strength is also a form of weakness and every weakness a strength.
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Michael Lewis |