JimBowie1958
Old Fogey
- Sep 25, 2011
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We have all heard about the problem with subprime mortgages and ARMs, but the subprime mortgage aspect of the Great Recession was one small part of the fiasco. The amplification of the disaster into a nearly apocalyptic catastrophe was the worst part. The use of CDOs, SIVs and MBS' made the whole thing so Gawd Awful that the problem has still not been contained entirely and the EU faces the long term prospect of its central banks facing insolvency even today.
Causes of the European debt crisis - Wikipedia, the free encyclopedia
But the underlying cause for all this is the corruption, nepotism and willingness to engage in fraud as a part of a normal business model in the current financial industry. Go see 'The Big Short' for an entertaining crash course on how this all happened and how a precious few saw it coming and made money off of it.
Michael Burry - Wikipedia, the free encyclopedia
After shutting down his web site in November 2000, Burry started Scion Capital, funded by a small inheritance and loans from his family. The company was named after The Scions of Shannara, a favorite childhood book. Burry quickly earned extraordinary profits for his investors. According to Lewis, "in his first full year, 2001, the S&P 500 fell 11.88 percent. Scion was up 55 percent. The next year, the S&P 500 fell again, by 22.1 percent, and yet Scion was up again: 16 percent. The next year, 2003, the stock market finally turned around and rose 28.69 percent, but Mike Burry beat it again—his investments rose by 50 percent. By the end of 2004, Mike Burry was managing $600 million and turning money away."[3]
In 2005, Burry started to focus on the subprime market. Through his analysis of mortgage lending practices in 2003 and 2004, he correctly forecast a bubble would collapse as early as 2007. Burry's research on the runaway values of residential real estate convinced him that subprime mortgages, especially those with "teaser" rates, and the bonds based on these mortgages would begin losing value when the original rates reset, often in as little as two years after initiation. This conclusion led Burry to short the market by persuading Goldman Sachs to sell him credit default swaps against subprime deals he saw as vulnerable. This analysis proved correct, and Burry profited accordingly.[7][8][9]Ironically Burry's since said, "I don't go out looking for good shorts. I'm spending my time looking for good longs. I shorted mortgages because I had to. Every bit of logic I had led me to this trade and I had to do it".[2]
Though he suffered an investor revolt before his predictions came true, Burry earned a personal profit of $100 million and a profit for his remaining investors of more than $700 million.[3] Scion Capital ultimately recorded returns of 489.34 percent (net of fees and expenses) between its November 1, 2000 inception and June 2008. The S&P 500 returned just over two percent over the same period.[3]
According to his website, Burry liquidated his credit default swap short positions by April 2008 and did not benefit from the taxpayer-funded bailouts of 2008 and 2009.[10] He subsequently liquidated his company to focus on his personal investment portfolio.[10]
In an April 3, 2010, op-ed for the The New York Times, Burry argued that anyone who studied the financial markets carefully in 2003, 2004, and 2005 could have recognized the growing risk in the subprime markets.[11] He faulted federal regulators for failing to listen to warnings from outside a closed circle of advisors.[11][9]
Steve Eisman - Wikipedia, the free encyclopedia
James Mai
Fascinating gentlemen who did not fall into the mass hypnotism that led to the Great Recession.
Causes of the European debt crisis - Wikipedia, the free encyclopedia
But the underlying cause for all this is the corruption, nepotism and willingness to engage in fraud as a part of a normal business model in the current financial industry. Go see 'The Big Short' for an entertaining crash course on how this all happened and how a precious few saw it coming and made money off of it.
Michael Burry - Wikipedia, the free encyclopedia
After shutting down his web site in November 2000, Burry started Scion Capital, funded by a small inheritance and loans from his family. The company was named after The Scions of Shannara, a favorite childhood book. Burry quickly earned extraordinary profits for his investors. According to Lewis, "in his first full year, 2001, the S&P 500 fell 11.88 percent. Scion was up 55 percent. The next year, the S&P 500 fell again, by 22.1 percent, and yet Scion was up again: 16 percent. The next year, 2003, the stock market finally turned around and rose 28.69 percent, but Mike Burry beat it again—his investments rose by 50 percent. By the end of 2004, Mike Burry was managing $600 million and turning money away."[3]
In 2005, Burry started to focus on the subprime market. Through his analysis of mortgage lending practices in 2003 and 2004, he correctly forecast a bubble would collapse as early as 2007. Burry's research on the runaway values of residential real estate convinced him that subprime mortgages, especially those with "teaser" rates, and the bonds based on these mortgages would begin losing value when the original rates reset, often in as little as two years after initiation. This conclusion led Burry to short the market by persuading Goldman Sachs to sell him credit default swaps against subprime deals he saw as vulnerable. This analysis proved correct, and Burry profited accordingly.[7][8][9]Ironically Burry's since said, "I don't go out looking for good shorts. I'm spending my time looking for good longs. I shorted mortgages because I had to. Every bit of logic I had led me to this trade and I had to do it".[2]
Though he suffered an investor revolt before his predictions came true, Burry earned a personal profit of $100 million and a profit for his remaining investors of more than $700 million.[3] Scion Capital ultimately recorded returns of 489.34 percent (net of fees and expenses) between its November 1, 2000 inception and June 2008. The S&P 500 returned just over two percent over the same period.[3]
According to his website, Burry liquidated his credit default swap short positions by April 2008 and did not benefit from the taxpayer-funded bailouts of 2008 and 2009.[10] He subsequently liquidated his company to focus on his personal investment portfolio.[10]
In an April 3, 2010, op-ed for the The New York Times, Burry argued that anyone who studied the financial markets carefully in 2003, 2004, and 2005 could have recognized the growing risk in the subprime markets.[11] He faulted federal regulators for failing to listen to warnings from outside a closed circle of advisors.[11][9]
Steve Eisman - Wikipedia, the free encyclopedia
James Mai
Fascinating gentlemen who did not fall into the mass hypnotism that led to the Great Recession.
