February 19, 2008

"Since Housing Prices Always Go Up, We Really Have Very Little To Worry About."

via Good Megan, The Subprime Primer seems like a good summary of how the subprime lending crisis happened from the investors' side. (It doesn't concentrate on the "weird mortgages screwing over homeowners" side.)

Make sure to keep clicking right arrow at least until you get to the Czar of Accounting. (Which yields the philosophy connection, since I used to teach acccounting ethics.)

Posted by Matt Weiner at February 19, 2008 10:51 AM

Hey, thanks. I thought that essay was super excellent, so I'm glad you liked it too.

Posted by: Megan at February 20, 2008 09:33 AM

Ehm. There was a useful part in the middle but the beginning and end aren't that original. Sort of like "Star Wars."

Go find a copy of Michael Lewis's essay collection "The Money Culture" (before he wrote books about sports, Michael Lewis wrote essential guides to the '80s) and read the classic 1989 piece "How Wall Street Took the S&Ls for a Ride." Basically, nothing's changed. Well, one thing's changed - this time even some of the banks got burnt.

The opening paragraphs of the essay describe a stereotype of young Ivy League hotshots selling junk securities to polyester-clad hick S&L execs from the provinces. Here's a quote:

Since mid 1985 risk-controlled arbitrage has been a euphemism on Wall Street for big-time gambling in the mortgage-backed bond market. CMO Equity (b. 1987) is a particularly slippery mortgage investment. The CMO stands for collateralized mortgage obligation, but bond salesmen call it "toxic waste."

There's nothing new under the sun. Except that this time, even some of the bankers believed their own sales pitches.

One of my pet crackpot theories is that the '80s never actually ended.

Posted by: Ben at February 26, 2008 12:54 AM

I was just trying to bait you by linking to a PowerPoint presentation. (Actually I'm not sure it is one.)

Posted by: Matt Weiner at February 26, 2008 04:30 PM

It appears to be Google's attempt to replace Powerpoint with something even crappier. Well, in principle it doesn't have to be crappier, but I can't even view the presentation in a web browser running on a Linux computer, which is MegaLame. How are these clowns going to use the web to overthrow Microsoft if they can't write Office-replacement software that is OS-independent?

Posted by: Ben at February 29, 2008 09:38 PM

Hey Matt! I wanted to come over here to say HI, since it was just a personal comment. To answer your question: I'm fine, thanks. How about you? I see you turned pro with this whole philosophy thing... :)


Posted by: Stephen Frug at March 1, 2008 11:42 AM
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