Further along the lines of your posts to me, there was an article in our local paper this morning by Andrew Frye from New York, headed, “Buffett stands by bank as Goldman Sachs faces vilification.”
According to Frye ...
”Buffett said people who felt cheated by the recession had unfairly lashed out at Wall Street when regulators, mortgage lenders and politicians should share the blame. ‘They are going to rewrite Genesis and have Goldman Sachs offering the apple,’ Buffett said.”
The way I see it, as I commented way back in the following link ...
Message 25269215
.... there was a failure on the part of those who should have been watch dogs and regulatory policemen to have taken note of what was being done and constructed in the backrooms of financial institutions, to take advantage of the “doomed-to-failure” sub-prime mortgage business, and have acted to do something about protecting the many thousands of folks who stood to lose from this impending debacle before it got completely out of hand.
There was no way on god’s earth that the bulk of the sub-prime mortgage loans that were being granted were sustainable in terms of their future payment conditions.
Once you start doing things contrary to sound mathematical principles, you’re on the slippery slope to nowhere, and eventually a large pigeon will distribute its foul load on your head.
The likes of Buffett and Munger have a very good insight and understanding of the mathematics of finance and economics and as a result of that, plus whatever else, saw the impending danger in the instruments that were created at the time and stated (as we’ve read many times) that they were “financial weapons of mass destruction”.
It should have been equally obvious to the regulators. And if it wasn’t, they should have, at least, taken note of what the man from Omaha had to say and speak to the man and do some digging and investigation in that regard. But they didn’t.
Needless to say, smart people at GS etc.., could also see what Buffett saw and took advantage of this know-how and shorted the junk to a very large extent. They then sat back and waited for the inevitable to happen.
I'd say that there are very few, if any, "morons" at GS.
That’s just the way I see it ... |
