Michael Lewis Talks to 60 Minutes About His New Book, 'Wall Street: Inside The Collapse'
Props to CBS for this "60 Minutes" interview with "Liars Poker" author Michael Lewis about the Wall Street crash. Believe me when I say it's well worth reading the whole thing:
But none of that has changed the Wall Street bonus culture. Lewis says there is a sense of entitlement to outrageous compensation that he thinks is way out of proportion to its contribution to the U.S. economy.
"How did that happen that somebody thinks they're automatically worth millions of dollars a year?" Kroft asked.
"Well, when you're surrounded by a lot of other people who are being paid millions of dollars of year, you're not thinking, 'Oh, it's outrageous for someone to pay me millions of dollars a year.' You're thinking, 'It's outrageous that Jim got $500,000 more than me.' That they're looking to each other as reference points rather than to the larger society," Lewis explained.
Asked if he thinks people are worth that kind of money, Lewis asked, "What do you mean are they worth that kind of money?"
"Do they deserve all that money?" Kroft asked.
"Again, what do you mean do they deserve it? They worked really hard. They spent a lot of hours in the office," Lewis said. "So you can't begrudge someone who starts a company and employs lots of people and so on and so forth for making a lot of money. I don't mind people making a lot of money. On Wall Street the business has become very obviously divorced from productivity, from productive enterprise."
"So in that sense, no. They don't deserve it. They didn't earn it," he added. "What they did was finagle it. They were very good at putting themselves in the middle of large financial transactions that probably shouldn't have happened in the first place and taking out little pieces of it. They generated trillions of dollars of subprime mortgage loans that should never have been made. But the world would be better off if that whole industry had never existed. So that's crazy."
Lewis says the more people learn about what happened, the angrier they become.
Asked if he sees anything happening to reform the system, Lewis said, "There are several things that obviously should be done that have not been done. And you can't explain to my mother why they haven't been done. Only a really smart person on Wall Street could explain why they haven't been done. But for example, all right, one of the things at the bottom of this crisis, we had these ratings agencies that called a lot of things AAA, gold-plated securities that were worthless."
"And the ratings agencies are paid, of course, by the Wall Street firms for their ratings. Why is that allowed? Why can you buy a rating? That seems like a very obvious thing to change. And people talk about it, but it hadn't happened. Credit default swaps, insurance contracts that we trade freely, but it's not classified as insurance. This market is the closest thing to, sort of, ground zero of the recent calamity. And yet, nothing has been done to change the market. Nothing's been done to make it more transparent, nothing's been done to make it more like what it is, an insurance market. That's an obvious reform," Lewis said.
"From the time I was at Salomon Brothers, it was incredible to me that the firm could advise customers what to buy and sell," he added. "At the same time, they are betting on the things that they're trying to sell their customers. So I might call you up and say, 'Wow, these subprime mortgage loans, they look really, really good. This pile over here, you oughta invest in that pile. ' And meanwhile, the traders behind me are betting against it.'"
Lewis believes the financial industry is living in a world so disconnected from American life that it cannot be sustained. He thinks it may take a while, but he believes Wall Street as we know it, has done itself in.
"The leaders on Wall Street completely lost any sense of their responsibility to the society," Lewis said. "And if you know you're gonna blow up AIG by putting $20 billion of bad subprime mortgage risk into it even though it's gonna be very profitable for you, you should stop and say this shouldn't be done."
Upton Sinclair said: It is difficult to get a man to understand something, when his salary depends upon his not understanding it.
Bestselling financial writer Michael Lewis is now saying the same thing. In an interview with 60 Minutes, Lewis said:
"Wall Street is able to delude itself because it's paid to delude itself. That's one of the lessons of this story. People see what they're incentivized to see. If you pay someone not to see the truth, they won't see the truth."
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility.
-Ambrose Bierce, The Devil's Dictionary
DOCUMENTARY, n. An ingenious device for exposing fraud and educating the public.
The Corporation (2003)
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
FINANCE, n.
The art or science of managing revenues and resources for the best advantage of the manager. The pronunciation of this word with the i long and the accent on the first syllable is one of America's most precious discoveries and possessions.
Ambrose Bierce, The Devil's Dictionary
Diabolus est Deus Inversus
That is an apt quote from Upton Sinclair.
It's the same with the Media I think.
"Great minds discuss ideas; average minds discuss events; small minds discuss people." ~ Eleanor Roosevelt
Did andy rooney deliver yet another rambling monologue about his colon polyps?
Diabolus est Deus Inversus
.
you know, the one who "took" advantage of the system?
close it down....I'd also be ok w/ burning it down.
Cue the Kabuki....
millions who've lost their homes.
now lets make it happen.
Cue the Kabuki....
http://www.youtube.com/watch?v=xNnAvTTaJjM
Diabolus est Deus Inversus
Hold tight..... we're in for nasty weather....
I don't know what you expect staring into the TV set...
Fight fire with fire!"
Cue the Kabuki....
It's the site of the enslavement of the islands' original inhabitants. Purge it.
I've got the gasoline.
NOBODY 2012
Indefensible Men
Yves Smith after Reinhold Niebuhr, Moral Man and Immoral Society here
statusquObama, change you can only pretend in
The sociopaths always have a rationalization that transforms their acts of predation into act of highest virtue.
It's one their defining qualities.
for observing that this observation about the "privileged" applies to just about every human being except infants and they do it unconsciously. It applies to the leaders of Communist parties as well as the Republican party. It applies to trade union members just as much robber barons.
Hasa Diga Eebowai
not. the. same.
"taking out little pieces" and profiting is not wealth creation.
good for lewis
They are not creating wealth, they are parasitizing it.
and it scared the sh*t out of me. We're doomed. The Banksters have made off with our entire economy. Welcome to The Great Depression II.
“The greatest evildoers are those who don’t remember because they have never given thought to the matter, and, without remembrance, nothing can hold them back,”
and it struck me as either naive or untruthful. I have been reading about this for 5 years, so I don't believe that a significant number of those CEO's didn't know exactly what they were doing and what the consequences would be. They just did it anyway.
belong in prison. Where the hell is the SEC?
“The greatest evildoers are those who don’t remember because they have never given thought to the matter, and, without remembrance, nothing can hold them back,”
Abbott and Costello - It's Payday.
The part of Wall Street aptly played by Abbott.
http://www.youtube.com/watch?v=u3hIMv0lklA
Prescient.
Anyone could see the game is over but there are many more turns to be played and people would rather continue on as though there might yet be a happy ending.
always seems to be the heart of the matter.....regulation/oversight of OTC derivatives market.
First thing we should be looking at is the regulation of this Trillion dollar industry as well as taxing (first) that which is not human labor (that does not benefit society ala alcohol/tobacco/etc). Start taxing just 0.1% of each OTC transaction and THERE is your health care budget right now.
Let's go back to the early 1900's and tax 95%. It'll be paper pushers funding other paper pushers that actually do things.
Considering their highest paid employees are the republicans and democrats, I doubt our government will see the truth anytime soon.
We really, really need to get rid of Rahmabama and all DLC republicans before it is too late - if it isn't already too late?
By the way, I read this guys stuff back in 2006, when everybody was still praising the "great" economy we had. It didn't add up to my lying eyes, and this guy was one of the few sounding the alarms who actually made sense to me.
I was alarmed at what I saw happening, and what I knew was coming. In fact, I sold my rental property because of his insight (along with Krugman and a few other voices from the wilderness), and made a little cash. One year later, the house would have been worth $40,000 less, and I would have been screwed.
It wasn't until September 2008 that jackasses like Cramer and Kudlow finally admitted something was askew in conservatard fantasy land! Yet, these imbeciles (and dozens like them) are still polluting our airwaves with idiocy and rightwing bullshit 24/7, as though nothing ever happened.
We are indeed doomed to repeat our mistakes, and once again it will be the people who will take it in the rear, while the criminals who orchestrated it all will get even richer!
Rush Limbaugh is what a smart person thinks a stupid bigot sounds like.
I caught part of this interview. I was struck by how similar this is to a book I read years ago called "Den of Thieves" by James B. Stewart. It was about Michael Milken and Ivan Boesky. Fuck, nothing has changed. If anything, it has just amped up, gotten bigger in scale. I also heard a law professor at USD Law School here in San Diego explain the derivatives and credit defaults. Man, my fuckin' head hurt after he was about halfway through. He said that even the heads of the banks didn't understand the products that they were selling. Boy, that inspired a lot of confidence. Maybe that should be the operative word, confidence, emphasis on "con."
just like he killed healthcare 'reform', to please his corporate benefactors at the expense of the American people.
http://www.huffingtonpost.com/2010/03/15/dodd...
What a joke.
I've got no problem when INVESTORS make money from INVESTING in businesses that actually provide products or services.
But that's NOT what Wall Street does.
They are CON MEN (and women!) .. SCAM artists.
And they really should not be rewarded for what they have done.
They should be indicted, handcuffed, tried, convicted, stripped of their ill-gotten gains and sent to rot in prison with incomprehensibly long sentences, like 3000 or 5000 years.
Democracy is too important to be entrusted to politicians.
Rise Up!
Protest!
why is any of this a surprise.
Nothing more!
few in america understand this is doing exactly what capitalism is intended to do.
but americans dont want to look at the system they want to blame.
the christians blame the devil, the atheists blame religion, the voters blame the politians, the have nots blame wall street, and so it goes blame blame blame and no one looks at the system.
even the progressives are in love with capitalist and only think we have two choices capitalism or socialism.
in my day it was capitalism or communism. the capitalists are ten times smarter than most including the progressives.
they have created in the minds of progressives capitalism and patroitism are synonyms. even better they have put into the minds of progressives that capitalism is the only road to personal freedoms.
sorry progressives but until you look deep into the evils of the capitalist system you will remain the puppets of the capitalists and corp fascism.
"A man with a law degree can steal a lot more than a man with a gun" Don Vito Corleone The Godfather by Mario Puzo
I just watched "Capitalism: A Love Story" over the weekend, and that's the basic message. Capitalism turns everything into a commodity (people, too) where the only thing that matters is the bottom line dollar values between buyers and sellers. There are other areas of "worth" that just don't come into play under capitalism. The trick is in decided what those areas are, and then how to determine the values in those other ares in order to offset the purely monetary considerations that currently hold sway.
In theme with the topic at hand, this was pretty telling.
Goodnight, Frau Blücher
as far as the comment goes. Geithner was in on it. Hank Paulson was in up to his eyeballs. Jamie Dimon. Greenspan. Bernanke. Lots more, the point being this is not a red team/ blue team "debate." When the guy in the vid says "I can't explain it to my mom, but..." he's correct. The scamsters made this just complicated enough so that "Joe Sixpack" can't really understand the degree of fraud that was being allowed because the money was so good from the top down. More than just a few in the blogosphere saw this coming a mile away with Calculated Risk being the first one I saw with quite obvious current and former mortgage professionals from every link in the food chain screaming bloody murder about it...but we were all dismissed as tinfoil hatters. There is a lot of disinformation being disseminated about the sordid mess and the perps and their aiders and abettors always trot out the "subprime crisis" line. This is done to blame the poor and minority borrowers, but that was only a small part of the scam. Subprime was the proverbial "trial balloon" to run through the bond ratings agencies to see if they could get a 'AAA' rating so shitty mortgage backed securities could be sold to "conservative" investors that supposedly don't buy risky assets. Having gotten their cut, they (Moody's, Fitch and S&P) said "sure." Next, came the Alt-A mortgage tranches for bigger bucks and fees, then came the jumbo mortgage bonanza.
This was not "capitalism," this was crony capitalism at best and fraud and larceny in fact. Free market capitalism implies that their is risk being taken. The "too big to fail banks" knew the numbers were way to big to ever have to pay out of pocket for a blowup so that left the taxpayer to bail them out. It was understood between the thieves. This is where the expression "privatized gains and socialized losses" comes in. Also known as "moral hazard." What Hank Paulson and his crew did was the infamous "October surprise." He got a Trillion dollars in cash from the TARP bailout along with immunity from prosecution and bonus guarantees for all his Wall Street cronies.
That is about as detailed as I can get on a blog commentary but let me just summarize with a couple of points. As MountainMan23 said above, arrests and seizure of assets are the only way we stand a chance to get out of this, the numbers are so big. Gigantic. They broke the banking system in their greed. Not fixable in its present form. But Obama has said "we're looking forward, not backward" with regards to the crimes of the past 10 years (from torture to this and everything in between.) If Geithner goes down, as he should, he will sing on Paulson and all the Bush/cheeeney crooks. We are entitled to justice and we aren't getting it. So, as long as he wants to maintain that ridiculous outlook, the perfect caper has been pulled off and we become another third world country, with a small percentage of uber-wealthy, no middle class and poverty levels for the mass majority not seen since the Great Depression, if then. And it won't happen overnight. It will slowly creep in. I honestly do not know if it it too late or not. I do know that if we all just sit here and hope for the best it is.
I didn't write the comments above, I stumbled on the story found on Info Wars but my link to the URL got filtered ***** out. So I relinked directly to MSNBC video.
Goodnight, Frau Blücher
talk about ENTITLEMENTS...
This is true SOCIALISM at work...
I caught the segment on 60 minutes and it was pretty scary. I really wish someone would step in and force legal action on the people that orchestrated this massacre of the economy.
The investor with aspergers that saw it coming was really interesting to watch though. The fact that he can read through the reports alone when the big corporations can't find the resources to do it is ridiculous.
I saw a similar article on http://www.homemortgageloans.com, and the sentiments there were very similar to the reaction here. I'm just hoping America doesn't take this sitting down.
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