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I'm so glad that God made me walk away that day.

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud.

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The typical mortgage bond was still structured in much the same way it had been when I worked at Salomon Brothers. The loans went into a trust that was designed to pay off its investors not all at once but according to their rankings. The investors in the top tranche, rated AAA, received the first payment from the trust and, because their investment was the least risky, received the lowest interest rate on their money. The investors who held the trusts’ BBB tranche got the last payments—and bore the brunt of the first defaults. Because they were taking the most risk, they received the highest return. Eisman wanted to bet that some subprime borrowers would default, causing the trust to suffer losses. The way to express this view was to short the BBB tranche. The trouble was that the BBB tranche was only a tiny slice of the deal.

...Bugg, this is some great stuff.

This sounds just like the protaganist in my (working title) book Scumbags.

:lol:

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

....The funniest part is this swindle is still rolling, right through the Federal Reserve.

Poor George Carlin, he died right before he got to see how the story ended.

We are *****ed.

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$4.6 trillion(the best guesstimate on the bailout bill) divided by 300 million Americans is about $14,000 per person. And I haven't seen what the average "bad debt"(credit cards, consumer credit) is per household, but imagine it probably averages out as close to that number.No wonder American Express recenly had itrself reclassfied as a bank-free money from you and me. Just let those marinate for a while. We have as a country with deficit spending and as individuals with profligacy lived way beyond our means.

Having said that I believe some auto industry bailout is appropriate, but only as part of a broader change in trade policies. We should only allow foreign cars built here to be sold here without tariff, and we should have matching tariffs on American cars shipped overseas. If Japan, South Korea and soon China want to sell cars here, make them here, or face the same tariff Ford, GM and Chrysler face marketing their cars there. Enough of the US playing the sap.

In contrast, what bothers me about the Wall Street bailout is that these financial services industry people are exactly the class of people who sold us "free trade" for cheap consumer goods at the expense of American manufacturing base. The auto workers, what ever their faults, have actually built things people can use. Yes, they've allowed unions to cause problems, but the blame is much more on moronic trade policies. We have never fully understood that price alone should not be a reason to ditch all manufacturing.We remain the only country who pretends Adam Smith's Invisible Hand is followed by everyone else.

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In contrast, what bothers me about the Wall Street bailout is that these financial services industry people are exactly the class of people who sold us "free trade" for cheap consumer goods at the expense of American manufacturing base. The auto workers, what ever their faults, have actually built things people can use. Yes, they've allowed unions to cause problems, but the blame is much more on moronic trade policies. We have never fully understood that price alone should not be a reason to ditch all manufacturing.We remain the only country who pretends Adam Smith's Invisible Hand is followed by everyone else.

No doubt, and Michael Lewis said as much, in the article:

Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility.

Bugg, believe me when I tell you, I hate banks, and I hate the government, in no particular order. I hate the government that responds to my job application when I say I'm a black male, but doesn't respond to the same exact resume and Q & A results when I say I'm a white male, as has happened on usajobs. gov.

I hate banks because I worked for a few, and they are run by imbeciles. Complete imbeciles. And I still wonder--- what could they have possibly done to have achieved their status and position in life? Think Duane from The Office.

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Thanks for posting this, I worked at Soly during the same years and I think a 20th anniversary edition of Liar's Poker is a great idea. It's funny, I'm still in the industry, and have been through all of the disasters described in this article, however this is the first time I have ever really wondered how it is all going to work out. It always does I try to tell myself, but I just don't have the usual confidence. The details of the current crisis as described by Lewis are spot on and a fascinating read, much more in depth than anything I have heard or read to date.

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Thanks for posting this, I worked at Soly during the same years and I think a 20th anniversary edition of Liar's Poker is a great idea. It's funny, I'm still in the industry, and have been through all of the disasters described in this article, however this is the first time I have ever really wondered how it is all going to work out. It always does I try to tell myself, but I just don't have the usual confidence. The details of the current crisis as described by Lewis are spot on and a fascinating read, much more in depth than anything I have heard or read to date.

Dude, I passed the series 7 and 63 2 years ago, this April. I let them expire, I let them go.

Maybe if I had been 25, not married, no kids, living at home with ma and dad, I could have toughed it out. But it wasn't even about that. It was just like, I looked around and I saw a bunch of meatheads who played high school football, and a bunch of geeks who were still hung up on the fact that they didn't---

It was just all of this pseudo macho BS that I despise, and not for nothing, but they were all dumbasses. You basically read cue cards until you memorized them. I'm like, I just shelled out $25 grand for a BA, so I can read cue cards over the phone???

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Dude, I passed the series 7 and 63 2 years ago, this April. I let them expire, I let them go.

Maybe if I had been 25, not married, no kids, living at home with ma and dad, I could have toughed it out. But it wasn't even about that. It was just like, I looked around and I saw a bunch of meatheads who played high school football, and a bunch of geeks who were still hung up on the fact that they didn't---

It was just all of this pseudo macho BS that I despise, and not for nothing, but they were all dumbasses. You basically read cue cards until you memorized them.

lol...there are some good, smart people mixed in but you are not too far off...I remember when you were preparing for those tests, I really wouldn't encourage anyone to go into my business these days. I'm there until they decide they don't want me anymore, too many responsibilities to my family at this point, some day I'll be doing something else, and probably much happier for it.

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lol...there are some good, smart people mixed in but you are not too far off...I remember when you were preparing for those tests, I really wouldn't encourage anyone to go into my business these days. I'm there until they decide they don't want me anymore, too many responsibilities to my family at this point, some day I'll be doing something else, and probably much happier for it.

I don't regret it. I heard those tests were tough, and I was curious to see if I could pass them. I did.

Honestly, I think the practice tests were harder. :lol:

I also learned alot about finance and investments. One day I'll have some money to invest so this will help me out. I would never seek financial advice from anybody, no less a stranger.

The very idea of cold calling people out of the blue---

I just couldn't fake it to make it. I mean, let's get down to brass tacks: IT'S LYING.

:lol:

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The very idea of cold calling people out of the blue---

I was doing that for a very short time before going to Salomon in the mid 80's, I hated it. The other reason I left retail was Bob Farrell was predicting 1400 for the DJIA at Merrill, where I was at the time, and I though he was crazy, lol, oh well.

:bag:

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I was doing that for a very short time before going to Salomon in the mid 80's, I hated it. The other reason I left retail was Bob Farrell was predicting 1400 for the DJIA at Merrill, where I was at the time, and I though he was crazy, lol, oh well.

:bag:

Who knew? :lol:

Hey, we might be back at 1400. \:D/

Hey look, the bottom line is this, if I had stayed at Fordham Financial on Wall Street, I would be just getting my book, now.

After all that blood, sweat and tears, I'd finally get a desk---

In this market. :lamo:

When the muse talks, run don't walk.

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I don't regret it. I heard those tests were tough, and I was curious to see if I could pass them. I did.

Honestly, I think the practice tests were harder. :lol:

I also learned alot about finance and investments. One day I'll have some money to invest so this will help me out. I would never seek financial advice from anybody, no less a stranger.

The very idea of cold calling people out of the blue---

I just couldn't fake it to make it. I mean, let's get down to brass tacks: IT'S LYING.

:lol:

None of this stuff was rocket science. I loved my time in finance, all the way right up until the day I just woke up on the other side of the bed and decided I needed to leave and do something else a few weeks before christmas. I will admit though, I was on the institutional side, never would have had the patience for retail and boiler room type cold calling. Sometimes I think i was a bit hasty and gave up a solid career when i was on the fast track, but in the end i have to just assume i did what was best for me. I'll tell you what though, the more I read about the sky falling, the more I would like to be in that world proving everyone wrong. One of the things I did learn, the smart guys make money no matter which way the market goes, and I think a lot of the dead weight will get shed in this climate and the really talented and smart people will shine through.

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None of this stuff was rocket science. I loved my time in finance, all the way right up until the day I just woke up on the other side of the bed and decided I needed to leave and do something else a few weeks before christmas. I will admit though, I was on the institutional side, never would have had the patience for retail and boiler room type cold calling. Sometimes I think i was a bit hasty and gave up a solid career when i was on the fast track, but in the end i have to just assume i did what was best for me. I'll tell you what though, the more I read about the sky falling, the more I would like to be in that world proving everyone wrong. One of the things I did learn, the smart guys make money no matter which way the market goes, and I think a lot of the dead weight will get shed in this climate and the really talented and smart people will shine through.

So is that why you were one of the first guys out? :P

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Before I went to law school, I had an internship with EF Hutton. Seemed like a great place to work, other than the check-kiting scandal that destroyed them. Which is kinda like discussing the Titanic's maiden voyage without mentioning the iceberg. That kind of silly scheme seems almost innocent when you look at this fiasco. And even in a place like that, with the walls falling in around them they spent like it would never end-expense accounts, black cars if you worked late, mucho primo Manhattan office space, Christmas parties (multiple for different divisions) at Windows on the World. The CEO was consulting with President Reagan, telling people to go eff themselves, getting his houses(mutiple) featured in all these BS architecture magazines. May be there was a cutthroat undercurrent, but it felt like a fun place to go to work-party your ass off, make big bucks, travel, expense account mayhem. It wasn't what I wanted to do.

LEft there summer of 1986,and they were offering me a job like it was cotton candy.I was going to law school anyway, wanted to be a DA in the worst way(which I did, another story another day), so it wasn't anything I really had an interest is doing, but it seemed like the days of wine&roses would never end.

And truth be told, it seemed like whether any clients made money, lost money or went and effed themselves was of zero concern. The coldcalling to little old ladies might have been done from nicer offices than most, but that was still at the core of what EFH was all about. It probably got to a point in this financial services industry that coldcalling went the way of the buffalo. Every dope with a few grand (me included) figured he was a Gordon Gekko in the making. And just wrote big checks to some broker with the expectation that their savings, and IRAs and 401ks would for the most part keep going up.

By spring of 1987, almost everyone that I had worked with got their crap boxed up and kicked to the curb. People who I used to work with were then taking blue collar jobs, becoming cops and firemen, electiricians, utility linemen,nurses doing almost anything to get away from that industry.They had seen the abyss and decided it wasn't for them. AI've heard a lot of that form people who work The Street-ride the wave, make some money and then go and get a real grown up job. It was like they had seen how effed up this all was and never wanted to deal with such insanity again.It was mostly guys like me who had been raised in middle class/working class families in and around NYC. ANd all had concluded this was freaking craziness as a career. I learned that there's zero job security in that industry. What I didn't learn is that trusting your money with such folks long-term is not a given.

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And truth be told, it seemed like whether any clients made money, lost money or went and effed themselves was of zero concern. The coldcalling to little old ladies might have been done from nicer offices than most, but that was still at the core of what EFH was all about. It probably got to a point in this financial services industry that coldcalling went the way of the buffalo. Every dope with a few grand (me included) figured he was a Gordon Gekko in the making. And just wrote big checks to some broker with the expectation that their savings, and IRAs and 401ks would for the most part keep going up.

I always get a kick out of the way hollywood can make cold-calling look so exciting and glamorous (Boiler room, Pursuit of Happyness et al). :lol:

And that was back in the day when people actually answered their phones.

I was bored out of my mind. One answering machine or secretary after another. "The Doctor is seeing a patient, can I take a message?" Click.

I liked all the comments left behind on all the dog eared index cards by the previous stooge who had a go at this.

I think the only ones who stand a chance inherit their book.

One of the things I did learn, the smart guys make money no matter which way the market goes, and I think a lot of the dead weight will get shed in this climate and the really talented and smart people will shine through.

I'm not so sure this industry is going to attract the amount of candidates that they have in the past.

I know one thing, the incentive package will have to be more lucrative if they hope to get anybody with an IQ over 65.

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  • 2 weeks later...

Sweet:

Ex-Nasdaq chairman arrested on fraud charge in NYC

Friday December 12, 8:11 am ET

By Larry Neumeister, Associated Press Writer Ex-Nasdaq chairman arrested on securities fraud charge in NYC; accused of $50B `Ponzi scheme'

NEW YORK (AP) -- A Wall Street powerbroker for nearly 50 years who built an influential firm has confessed to a massive fraud scheme that will cost investors at least $50 billion, federal authorities say.

http://biz.yahoo.com/ap/081212/wall_street_arrest.html

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Sweet:

Ex-Nasdaq chairman arrested on fraud charge in NYC

Friday December 12, 8:11 am ET

By Larry Neumeister, Associated Press Writer Ex-Nasdaq chairman arrested on securities fraud charge in NYC; accused of $50B `Ponzi scheme'

NEW YORK (AP) -- A Wall Street powerbroker for nearly 50 years who built an influential firm has confessed to a massive fraud scheme that will cost investors at least $50 billion, federal authorities say.

http://biz.yahoo.com/ap/081212/wall_street_arrest.html

Bank Of America to shed 30,000 to 35, 000 jobs after merger with Merrill Lynch. The ordinary workers get the shaft gain.

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  • 1 month later...

"New York City will help laid-off Wall Streeters switch industries by training them for new jobs and will work with foundations to set up boot camps for entrepreneurs, Mayor Michael Bloomberg said on Thursday."

This is a joke, right?

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  • 1 month later...

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