Words We Like: Michael Lewis

Michael Lewis on "ordinary, non-financial Americans'" view of the financial crisis:

They sensed they'd just been handed the role of the little fat kid in the game of crack the whip, who, at the start of the game, feels nothing at all but then suddenly finds himself launched headfirst into the neighbor's bushes.

We are suckers for a good turn of phrase.
Lets Start by Finding Some People to Blame [Michael Lewis]

09/17/08 at 11:09 AM Permalink | Comments (0) | TrackBack (0)
Filed Under: Quote of the Day

On Risk: Quote of the Day

It's become axiomatic that what led to the current financial & housing crisis was too much risk taken on by borrowers, banks, Wall Street investors, the real estate complex, et al. 

But could the problem have been too little risk? 

Steven Randy Waldman thinks so, and elegantly argues it was the relentless pursuit of risk-free return that lead to the current state of affairs. Emphasis ours:

We've trained a generation of professionals to forget that investing is precisely the art of taking economic risks, then delivering the goods or eating the losses...until owners of capital stop hiding behind cleverness and diversification and take responsibility for the resources they steward, finance will remain a shell game, a tournament in evading responsibility for poor outcomes.

Investors' childlike demand for safety has made the financial world terribly risky

Brilliant thinking.  There is much more.

08/07/08 at 08:56 AM Permalink | Comments (0) | TrackBack (0)
Filed Under: Quote of the Day

Quote of the Day: Kedrosky on Project Lifeline

Elaborating colorfully on a point we've made before - It's not ARMs that are the problem:

Freezing mortgage payments, as Henry Paulson's goofy Project Life non-plan plan announced today does in some circumstances, is irrelevant, sort of like hoping that fixing your car's broken window will cause the tires to re-inflate.

Paulson's Lifeline Project: The Non-Plan Plan [Kedrosky]

02/12/08 at 02:57 PM Permalink | Comments (0) | TrackBack (0)
Filed Under: Quote of the Day

Quote of the Day: Dallas Fed President Fisher

Speaking in Mexico, of course, since this is BTM International today:

"Monetary policy acts with a lag. I liken it to a good single malt whiskey or perhaps truly great tequila: It takes time before you feel its full effect. The Fed has to be very careful now to add just the right amount of stimulus to the punchbowl without mixing in the potential to juice up inflation once the effect of the new punch kicks in."

Maybe now the "Fool in the Shower" analogy (too hot...too cold, get it?) will finally (please?) be discarded.

Though Fisher has a long history of shooting from the hip, was a dissenting vote at the last cut, and is often ignored by the markets, today's selloff in mortgage bonds, (and the resulting increase in mortgage rates) was in part driven by this statement.

In other words, the Fed may still have a hawkish, anti-inflation bent, and could stop the rate cutting party right quick.

02/07/08 at 02:29 PM Permalink | Comments (0) | TrackBack (0)
Filed Under: Interest Rates, Quote of the Day, The Fed