Jun 262012

A couple of years ago I blogged about a book called “The Big Short” by Michael Lewis. One of the main characters of the book was a physician turned investor named Michael Burry who made millions of dollars betting that the housing market and the derivatives that fueled it would collapse.

It is very difficult in these days of main street media propaganda and conventional wisdom to find truth tellers. But they are out there if one looks hard enough. Michael Burry told the truth in a New York Times editorial of April 2010.

He concluded the editorial with pointed criticism of the government and, particularly the Chairman of the Federal Reserve Bank:

Instead, our leaders in Washington either willfully or ignorantly aided and abetted the bubble. And even when the full extent of the financial crisis became painfully clear early in 2007, the Federal Reserve chairman, the Treasury secretary, the president and senior members of Congress repeatedly underestimated the severity of the problem, ultimately leaving themselves with only one policy tool — the epic and unfair taxpayer-financed bailouts. Now, in exchange for that extra year or two of consumer bliss we all enjoyed, our children and our children’s children will suffer terrible financial consequences.

It did not have to be this way. And at this point there is no reason to reflexively dismiss the analysis of those who foresaw the crisis. Mr. Greenspan should use his substantial intellect and unsurpassed knowledge of government to ascertain and explain exactly how he and other officials missed the boat. If the mistakes were properly outlined, that might both inform Congress’s efforts to improve financial regulation and help keep future Fed chairmen from making the same errors again.

One might expect Dr. Burry would be invited to testify before Congress or asked to consult on matters where his track record was clearly superior to the that of the bureaucrats. Not to be. Instead he was audited by the IRS and visited by the FBI and spent a million bucks to defend himself.

Recently, he spoke at the commencement of the UCLA economics department with a talk that, hopefully, would inspire these new graduates to independent thought rather than dreams of wealth as masters of the universe. It’s a talk worth listening to even though the academics seated behind Dr. Burry seem bored to distraction.

Sadly, nothing has changed on Wall Street or in government.


  4 Responses to ““I Bet Against America and Won””

  1. Burry is a fascinating guy. He has Asberger’s and, as is often the case with this “malady,” a kind of genius and brilliant insight. An MD and PhD in economics, he turned his back on Wall St. and now grows almonds in No Calif. — the best use of water resources, he believes.

  2. By the Bye, observe the berobbed clown behind him and his various nose probes and assorted gesticulations etc — reminiscent of a bored 12 year old. The groves of academe contain a lot of rotten stumps and deadwood.

  3. Yes. No more short term benefit for long term risk. Please, more short term risk for long term benefit. Sadly, I sigh with resignation because those with the power do not seem to agree. Thanks for “standing clear,” for reminding us that things may not always be as they are now through your blog, and for “stepping outside your paradigm for a fresh look now and again.”

  4. Thoroughly enjoyed this. Hugely insightful. Thanks for posting.

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