The ill Billionairs.

Want to know why you’re about to get poorer? Go to: http://www.bbc.co.uk/programmes/p007dvhr

It’s about “The Big Short.” Nothing to do with football strip or the time you found yourself dazed on the other side of the room. ‘Shorting’ in the financial sector is an instrument for making money if an investment value goes down; a bet that a horse will lose basically. Now up to 2005 all the investment banks were having a great time making money from lending to homebuyers. The more they lent, the more house prices went up so the loans were always covered. Everyone was happy and all the horses were winning. But there comes a time as the race gets longer and longer when horses begin to stagger. Enter a neurologist with aspergers called Michael Burry. He quit his job and became an outsider on Wall Street spending his time, because of his syndrome, in isolation on the internet. He foresaw the horses that were laying the golden eggs would eventually stall. In the long race of the rest of time this couldn’t go on. So he invested in shorting the sub-prime mortgage bonds, which had over the previous couple of years been glammed up like an aging film star nearing death. Everyone on Wall Street hated him and his investors for trying to shatter the illusion they had all jointly created. By 2008 the horses were falling like flies and Mike was making billions. It was what’s been termed, ‘privatising the profits and socialising the losses.’ Think about it. That’s about robbing the poor to pay the rich, legally. By divorcing the financial markets from real world value they had created the slight of hand necessary to suck money into private hands. Mike et al’s bet was paying off by making millions of people poorer. House prices dropped, loans went bad and the rest is history. Meanwhile Mike, reviled by all, threw it all in as he and many of his investors became ill; wealthy but miserable. The banks had to be bailed out by ‘social money’, i.e. ours, all that is except Goldman Sachs who are now being prosecuted. It’s a fascinating interview well worth listening to. And where to put the blame? Well it seems rather than specific groups of individuals, everyone from borrowers to hedge fund managers played their part, but the main culprit was the human brain. It has a propensity for Psychotic Group Delusion that allows us all to in a sense go mad together. It took a guy who, due to his aspergers syndrome, was sufficiently un-socialised to recognise it. OK he made a lot of money but he did point out the Emperor was stark bollock  naked.