Thursday, October 23, 2008

How We Got Here Part 497

Stocks continue to get battered and indignation continues on many fronts: Main Street is pissed that they got screwed by Wall Street, homeowners are pissed that that banks are getting dollars but they can't get relief from the mortgage they can't afford, politicians are pissed that companies got us into this mess.

What you won't hear is talk about who created and enabled the environment in which this financial high wire act was taking place. It seems to me that it is more difficult to get a driver's license in New Jersey than it is to create a credit default swap. It's certainly more difficult than it was to get mortgage 5 years ago.

Jeremy Grantham, often bearish value investor at GMO, probably isn't too happy that someone sent his October letter to me, but someone did, and I love the following quote: "Why did our leaders encourage the deregulation, encourage the leveraging and risk-taking, and completely miss or dismiss the
growing signs of trouble?"
Citadel Chief Ken Griffin, who apparently is rarely quoted, was quoted as follows yesterday: "Amongst the hue and cry that we need more regulation ... we need to keep in mind that it is our regulated entities that failed us first and not the unregulated part of the I hope that our policymakers next year, when they try to ensure that what has happened recently never happens again, keep in mind that there is a balance between free markets and socialism, and that this country has achieved greatness by finding the right side of that balance to be on."

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