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Saturday, December 20, 2008

Depths of Depravity

Michael Lewis, author of Liar's Poker, the entertaining book on the now-quaint seeming excesses of Wall Street in the '80s, on the present debacle:
The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.
From and well worth reading in full.

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