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Michael Lewis Discusses Wall Street's Neverending Mass Delusions

Tyler Durden's picture




 

In this two-part special on CBS's 60 minutes, Michael Lewis continues on his crusade of exposing Wall Street's massive delusion that it provides a service of value to society. "The incentives for people on Wall Street got so screwed up, that the
people who worked there became blinded to their own long term
interests. And because the short term interests were so overpowering.
And so they behaved in ways that were antithetical to their own long
term interests." His observations and conclusions are, as always, spot on.

Must watch.

Part One


Watch CBS News Videos Online

 

Part Two


Watch CBS News Videos Online

 

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Mon, 03/15/2010 - 09:25 | 265692 TraderMark
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It was a good video and I watched it with people who are not familiar with the goings on, on wall Street so I was glad it was discussed in 8th grade terms so the masses can understand.

There is also a great interview on Bloomberg (text form) I'll be posting on my site later in the day.

 

In the meantime Chris Whalen (another truth teller) and Dick Bove explain how the Fed, after its incompetence, is grabbing more power in 'financial reform' and pretty much the big banks got what they want.  Carry on plebes.

 

http://www.fundmymutualfund.com/2010/03/video-chris-whalen-and-dick-bove.html

Mon, 03/15/2010 - 09:46 | 265713 SWRichmond
SWRichmond's picture

And so they behaved in ways that were antithetical to their own long term interests.

Words of wisdom from my dad, many years ago: "Don't shit where you live".  The words rang with his generation, many of whom learned them first hand in foxholes.

Mon, 03/15/2010 - 10:10 | 265740 dnarby
dnarby's picture

I believe that phrase is more accurately: "Don't shit where you eat."

Mon, 03/15/2010 - 09:52 | 265718 Anonymous
Anonymous's picture

Wall Street is hurting the real economy and is nothing more than a casino now. At the big investment banks they are now pocketing billions in bonuses courtesy of the fed's easy money doing transactions that a 6 year old could execute.

Mon, 03/15/2010 - 09:53 | 265721 Anonymous
Anonymous's picture

Great piece - Bloomberg is interviewing him this evening.

Mon, 03/15/2010 - 09:54 | 265725 Anonymous
Anonymous's picture

Verry interesting how they left out the whole houses for everyone program that started this whole thing. LOL. Lets not forget that brilliant legislation.

Mon, 03/15/2010 - 10:55 | 265778 crosey
crosey's picture

+1.  But there's no way that CBS would put any light on those players.

Mon, 03/15/2010 - 10:18 | 265753 Hulk
Hulk's picture

Perhaps between Lewis, McDonald and Markopolos,

folks will wake up. probably not though. But the public

certainly has enough well thought out and understandable

data to come to the conclusion that things financial are very corrupt.

Here is Stewart interviewing Markopolos,another must watch

http://www.youtube.com/watch?v=_ORvZjBKo-I

 

Mon, 03/15/2010 - 10:28 | 265764 Anonymous
Anonymous's picture

Too bad Lewis and 60 Minutes cast the problem as stupidity rather than corruption.

Convenient, of course, for the SEC, the DOJ, the FBI, etc. But too bad for the rest of us.

Mon, 03/15/2010 - 10:47 | 265773 crosey
crosey's picture

...and I submit that "they" have moved well beyond merely pursuing short-term interests.

Theirs is now white-collar looting. 

You don't find looting when socio-economic conditions are stable, and participants are confident in future stability.

Mon, 03/15/2010 - 10:47 | 265774 Dehrow
Dehrow's picture

This is all very disheartening. People need to be able to invest capital, yet nowadays they are all becoming victims of uncapitalistic bahavior, which would only end in mass pain. Son of a Bitch.

Mon, 03/15/2010 - 11:06 | 265797 Stuart
Stuart's picture

He's far too forgiving of Wall Street execs saying this is largely a result of incompetence.   I call BS on that.   They damn well knew but greed was simply too overpowering.   A missed opportunity to drive that home in this interview. 

Mon, 03/15/2010 - 11:17 | 265808 Handle with care
Handle with care's picture

I put the incompetence at the political level, although perhaps corruption is a term that explains it better

 

Basically the politicians agreed to change the laws to allow a town full of sociopaths to own fire insurance on each other's houses and then they act shocked when the town burns down

Mon, 03/15/2010 - 12:06 | 265860 Assetman
Assetman's picture

I don't buy into incompetence as a major factor at the political level either.  Not when financial firms become primary contributors for re-election campaign coffers.  Incompetence only plays in where an elected official could hold out for twice as much "contribution" for a vote, but doesn't.

Incompetence provides a very convenient excuse for corruption.  As more of the fianancial system gets swallowed up, we will hear more cries that incompetence caused our problems rather than corruption. 

Why?  Becuase incompetence keeps you out of jail, at least most of the time.  Corruption, if you get caught, usually doesn't.

It's great that Michael Lewis is willing to go on such a crusade.  But please, these are sociopaths who are going to great lengths to take advantage of corrupt systems.  Calling incompetence when the evidence suggest otherwise is being way too kind.

Mon, 03/15/2010 - 12:30 | 265888 Handle with care
Handle with care's picture

I agree with you completely.  I was being facetious in first calling it incompetence

 

Even if it was incompetence and not corruption, where are the resignations?  Where are the firings?

Mon, 03/15/2010 - 11:13 | 265803 Lndmvr
Lndmvr's picture

Incompetence. Thats how I explained the broken tv screen to my wife.

Mon, 03/15/2010 - 11:16 | 265807 Jean Valjean
Jean Valjean's picture

"The were destroyed by their own folly"

Who exactly has been destroyed?  Wall Street doesn't appear destroyed to me.

Mon, 03/15/2010 - 13:50 | 265990 chunkylover42
chunkylover42's picture

Tell that to Lehman and Bear. 

This is not a story without casualties.  There are far to few, to be sure, but the number is not zero (I'm not even going to get into the who and the why...).

Mon, 03/15/2010 - 11:23 | 265813 ff2017
ff2017's picture

But it's important to remember that the Volcker rule doesn't correct any of the problems that caused the meltdown.  It's just more regulation.

 

/sarcasm

Mon, 03/15/2010 - 11:23 | 265815 Gimp
Gimp's picture

Tried to watch but too many Pfizer ads WTF.

Mon, 03/15/2010 - 11:39 | 265838 ff2017
ff2017's picture

Hah! No wonder no one read the prospectuses on the CDOs!

 

Mon, 03/15/2010 - 11:44 | 265844 Rainman
Rainman's picture

Lewis never said anything that has not been digested and analyzed by many here at ZH for months. But the value of the 60 minutes interview is that the skunk story that is Wall Street is featured in a mainstream TV show that has a very large audience. It throws a little more gas on the fire....scaring the shit out of the boyz and the CongressCritters.

Every little bit helps.

I still believe the catastrophic "event" must come to eventually ignite meaningful change because the system is too far gone now. A TV show changes nuthin'.

Mon, 03/15/2010 - 12:20 | 265874 Grand Supercycle
Grand Supercycle's picture

 

The bullish USD weekly chart continues and DOW / SP500 / EURO daily charts give bearish warnings again.

http://www.zerohedge.com/forum/market-outlook-0

Mon, 03/15/2010 - 12:42 | 265904 Stuart
Stuart's picture

Given what we now know about Lehman brothers, Michael Lewis was wrong is labelling this as a product of incompetence.  It was outright, pure, deliberate fraud, period, full stop.   Enough of the political correctness.  

Mon, 03/15/2010 - 13:29 | 265953 ChevronSky
ChevronSky's picture

Exactly. Blatant bold-faced fraud.

Mon, 03/15/2010 - 13:22 | 265947 Cerulean
Cerulean's picture

Watched the vids and find them excellent.

Having said that, I just read :http://www.bloomberg.com/apps/news?pid=20601039&sid=aaagOLYMd4yg&refer=h...

which is an article that M.L wrote in January 2007. Very, very interesting. Basically, ML dismissed as ninnies the people who warned that the markets and specially the derivatives were dangerous and about to blow up.

Read

 

Mon, 03/15/2010 - 16:05 | 266174 Chaz
Chaz's picture

You're on to something Cerulean.

Here we have someone who was decrying the alarmists of times past as naysayers.

Now here he comes saying that even when we were right and he was wrong... he was still right.

This guy has 'fishy' written all over him.

Mon, 03/15/2010 - 14:40 | 266055 chet
chet's picture

Makes me want to pitchfork somebody....

Mon, 03/15/2010 - 15:24 | 266104 AngelFace
AngelFace's picture

How easily we forget "Lesson Number One" from Frank Lopez (a.k.a. Robert "T.H.E. Cat" Loggia)...

http://www.imdb.com/title/tt0086250/quotes?qt0458832

 

Mon, 03/15/2010 - 16:03 | 266172 Chaz
Chaz's picture

I'd be happy to see some truth come out in this regard.

However, he poisons the well with this statement (which mind you appears at the very beginning of his statements):

"This was an episode where capitalism was almost destroyed just by the capitalists."

This was NOT an instance of capitalists destroying capitalism.  This is an instance of corpratists trying to use the government (and holding the government and the people hostage in the process) to change the rules and in the process destroy capitalism for their own gain.  Granted, that's the only error I see (so far) in his analysis, but it's a significant one.

This crime was not caused by capitalists practicing the rules of capitalism.  This was created by criminals trying to game the system and damn near bringing the whole thing down in the process... with us along with it!  These bastards are criminals who were trying to get the government and the people to play along... not capitalists.

Granted, he tells us the truth 99 percent of the time, and this isn't a case of 'falsus in uno falsus in omnibus' but he's telling us 99 truths to push 1 big lie.  A lie that will only get in the way of fixing the actual problem in a big way.

Mon, 03/15/2010 - 17:39 | 266323 Boop
Boop's picture
Michael Lewis: Junior Salesgirlieman, By Janet Tavakoli

I was in the Salomon Brothers' 1985 training class that Michael Lewis lampooned in his amusing book, Liar's Poker. Imagine my surprise to see him billed as a trader on 60 Minutes, since he was actually a junior salesman. Well-heeled male peacocks strutted the trading floor, and junior salesmen were girlie-men, mere eunuchs serving their pashas.

Michael hit the roof when I ribbed him about the mischaracterization.* Yet, in January 2007 he didn't spare the "wimps, ninnies, and pointless skeptics" at Davos. I wasn't at Davos (Michael wasn't either), but he derided people who staked their reputations--as I staked mine--on the fact that the financial system was in peril. One might think he'd have a thicker skin, when turnabout was fairplay and truth was his casualty.

Michael had asserted "Davos Man...will brood about virtually anything, no matter how little he knows about it." He ridiculed their concern of a pending crisis due to the surge in derivatives demand and called it "this year's case in point." Then Michael showed how dangerous it is to be a brilliant writer with a poor command of facts and their true meaning:

None of them seemed to understand that when you create a derivative you don't add to the sum of total risk in the financial world; you merely create a means for redistributing that risk. They have no evidence that financial risk is being redistributed in ways we should all worry about.

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