2008 Flying Monkeys of the FIRE Economy Award

[moonshot]

Re: 2008 Flying Monkeys of the FIRE Economy Award

To be sure, the FIRE sector gets drunk on its own Kool-Aid. I remember all the hiring by investment banks in 2000, and more recently, the investment banks buying mortgage businesses in 2005 and 2006.

If the banks creating the CDOs and CDO^2s really understood how toxic some of these things were, they wouldn't have been sitting on billions of the stuff when the music stopped. The way banks are set up, senior management, and in particular, one layer below, usually comprises true believers. The guy who was warning that this stuff will eventually blowback is driven out or passed for promotion (these persons are typically too early with their call as they cannot believe things will ever get so overextended), and the guy in charge of the desk responsible for huge increases in profits is promoted. By the time he becomes a division head, you can be damn sure that (usually) he will be dancing with the girl that brought him to the party.

Then, things blow up, lots of people are replaced, typically by heads of businesses that are currently making money, and the cycle continues.

[ThePythonicCow]

Re: 2008 Flying Monkeys of the FIRE Economy Award

Some day when the FIRE Economy no longer dominates our political system, media, and corporate life, and the system of economic rent extraction that weighs down on our economy is lifted, we will recall ads for complex mortgages on TV and heaps of direct mail credit card offers the way we do cigarette ads from the dark ages when Big Tobacco controlled Congress and covered the ad budget for ABC, NBC, and CBS.

This statement is the most conclusive proof I've seen yet that EJ is an optimist.

[thunderdownunder]

Re: 2008 Flying Monkeys of the FIRE Economy Award

Wow - I understood it, felt the anger, re lived the tech bubble,looked in the rear vision mirror for confirmation, exhaled and then applauded loud enough to wake the dog.
I still can't find what changed so demoniacally around 1972-3 that sent us all down these rocky rapids. Something turned the world upside down and for the worst. Yeah I'm an old fart but I think while I stink.
Cheers to you old son for a great article.
Question ??? when are you going to take on the Big Pharma who deal with doctors and pyjamas. Now that's a bent game that puts the Nazi's "final solution" to shame.
If you wait just a short while, Median house prices will Rise as the $1.5 million dollar homes that sell for $750,000 get put in the statistics - Green shoots will be in print everywhere.

There are Lies, Damned lies and then Statistics, and you can't argue with facts.

If you want my vote it goes to a certain 3 off, Limited Liability Companies (LLC) called "Murky lane"(or something similar) I, II & III in the latest US Fed report. Thats where they put ALL the crazy monkey's that don't fly no more

[marvenger]

Re: 2008 Flying Monkeys of the FIRE Economy Award

EJ still has an Austrian bent to me. Hoping for the divine conditions of the mutually beneficial market, preaching the inevitable failure of any intervention, hoping to return to venture capitalism to test himself in a pure competitive environment. I reckon best to just admit there needs to be some well thought out restrictions, and well funded agencies to monitor and legislate against new scams, despite the obvious opportunity costs. Markets in capitalism in particular, despite a theoretical theory of mutually grateful participants, always end up about one group successfully bending another over a barrel through various information, law making, organisational, access to resources etc asymmetries and twists of fate. If EJ is past his Austrian phase (i think the optimism you refer to means he's not), then surely he'd have to be more in favour of some "commie" restrictions. Otherwise, by my logic, if EJ thinks capitalism and markets are the be all and end all, the goose that laid the golden egg that is not to be interfered with, then he should give up iTulip and get back to trying to be the one standing over the barrel for his own sense of integrity.fficeffice" />