The speculator who made millions by shorting the subprime
mortgage market says another crisis is now in the pipeline.
You may have seen the movie, The Big Short.
It’s going to happen again.
The big bank bankers did not learn the lesson Congress wanted them to learn.
Why should we expect them to? They skunked Congress — TARP. They got incredibly
rich going up, and they got huge retirement settlements after it went down.
The public got no “golden
parachutes.” The public got hammered.
The next crisis already in
the pipeline.
Read this interview with the man who spotted the opportunity
first, and who got very, very rich betting against the bankers.
When I
spoke to some of the other real-life characters from The Big Short, I was surprised to hear that
they thought that financial reform was pretty effective and that the system was
much safer. Michael Lewis [author ofThe Big Short] disagreed. In your opinion,
did the crash result in any positive changes?
Unfortunately, not many that I can see. The biggest hope I had
was that we would enter a new era of personal responsibility. Instead, we
doubled down on blaming others, and this is long-term tragic. Too, the crisis,
incredibly, made the biggest banks bigger. And it made the Federal Reserve, an
unelected body, even more powerful and therefore more relevant. The major
reform legislation, Dodd-Frank, was named after two guys bought and sold by
special interests, and one of them should be shouldering a good amount of blame
for the crisis. Banks were forced, by the government, to save some of the worst
lenders in the housing bubble, then the government turned around and pilloried
the banks for the crimes of the companies they were forced to acquire. The zero
interest-rate policy broke the social contract for generations of hardworking
Americans who saved for retirement, only to find their savings are not nearly
enough. And the interest the Federal Reserve pays on the excess reserves of
lending institutions broke the money multiplier and handcuffed lending to small
and midsized enterprises, where the majority of job creation and upward
mobility in wages occurs. Government policies and regulations in the postcrisis
era have aided the hollowing-out of middle America far more than anything the
private sector has done. These changes even expanded the wealth gap by making
asset owners richer at the expense of renters. Maybe there are some positive
changes in there, but it seems I fail to see beyond the absurdity.
(For the full interview, click the link. Click back twice when
you’re finished reading.)
