Michael Burry became famous for selling their own toxic waste to the investment banks before the housing downturn. Bloomberg sat down with Burry this morning in a must see interview (video attached below):
On who is to blame for the financial crisis:
“My number one concern is that there has been a complete utter total abdication of personal responsibility though out our entire society. I don’t think anyone anywhere is taking blame themselves for what they did to contribute to the crisis. And again I think it gets back to that blame game. It is the most damaging thing we can do as a country is to blame a narrow set and not look within ourselves for what each of us did or didn’t do to the basic wrong that led to this mess.”
“From the borrower to the average broker all the way to the federal reserve through Congress, the President, several Presidents, I think that this has been coming for awhile and there has been a lessening of the credit standards over a period of time that ultimately led to the kind of blow off top that we have.”
On the current housing market:
“It’s an artificial market. There are a tremendous number of homes where the home homeowner, I think it’s between 2.5 to 3 million homes, where the home homeowner are more than 9 months past due and are not giving notices that they are past due and they’re just living there for free. I actually know one that has been there for a few years without having to pay anything. I think that Fannie and Freddie are basically being used as special purpose vehicles by our government to support the housing market. The private mortgage market is practically nonexistent; 96-97% of mortgages are flowing through Fannie and Freddie now. I think Fannie and Freddie are exercising a tremendous amount of power over the market by withholding properties from sale and not forcing foreclosure, the foreclosure process. I think that it would be best for the government just completely got out of the mortgage market and let the housing, because home prices are a function of income the leverage applied.
On what he is investing in agriculture, real estate and gold:
“I believe that agricultural land, productive agricultural land with water on site, will be very valuable in the future. And I’ve put a good amount of money into that. So I’m investing in alternative investments as well as stocks.”
“I think there is some value in real estate. You have to buy it right. It’s not in general, that’s the problem. I think that there are an awful lot of people out there looking to buy these distressed properties out there and so you need to find special situations. That is how I’ve invested from the beginning. I’m looking for these special situations, these unique ideas and that’s true in real estate too.”
“In my situation I’d rather go long on housing itself, real estate itself. Depending on how you structure it, in the real market, in the physical market, you can get some pretty good deals and I’ve done some of that too.”
“Paulson is big in gold and that is something is interesting to me and given how I see the world playing out. Other than that, I’m just saying, other than gold I haven’t really bought into the other
On the danger of having more power for the Federal Reserve:
“Well, I don’t feel that the economic theories and policies that got us into this mess are the same policies and theories that will get us out of this mess. And more to the point, I don’t — I’m 100 percent sure that the policies and theories that got us into this mess won’t prevent the next mess from happening.
And that’s probably my biggest frustration with the whole process. I don’t think that — I think with all the blame on Wall Street and all the focus on Wall Street — the increase — the perp walks for Wall Street — these things, in a lot of ways, are non — are not very productive. I think it’s not very productive to blame a narrow set of individuals or a narrow set of institutions.
Nobody is taking time to blame anything that anybody in Congress did or the Fed did or the other businesses, you know, how the banks acted, how the mortgage brokers acted, how people acted, how borrowers acted. There’s — there’s a lot of blame to go around. And I think this blame game being oriented entirely toward Wall Street is — is not overall helpful.
On Goldman Sachs shutting down its proprietary trading business:
“I think that brokers should not trade for their own account in securities — and securities that are also available to their clients. I just don’t think that’s pa — that should be done. I think broking should be pretty boring — safe, boring, low return business. And I think the same is true for banks. They should be very safe, solid, indestructible businesses. And so there are — some of these seemingly Draconian measures, I think, do need to be taken.”
Part 1 – Where is the accountability?
Part 2 – Burry buys gold and farm land
Source: Bloomberg TV
——————————————————————————————————————————————————The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s). The opinions of all guest authors or contributors can and will differ from those of Mr. Roche. These opinions do not necessarily represent the opinions or investment decisions of Mr. Roche. The author(s) may or may not have a position in any security referenced herein and may or may not seek to do business with one another or companies mentioned via this website. Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
A brief note on comments – The increase in users in recent months has resulted in an increase in unproductive comments. Any user who engages in the use of racial epithets or uses the comment section as a place to insult other users will be banned from the site. The comment section is welcome to all readers who are interested in asking pertinent questions and/or engaging in thoughtful, intelligent, and productive debate. In short, just be nice. Thanks.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.
HTML clipboardRichard Green:
Is housing the best way for low-income people to build wealth?, by Richard Green:
I was thrilled to be invited to the Future of Housing Finance conference held at
the Treasury Department and co-sponsored by HUD this week. It was particularly
nice to be seated next to Self-Help's Martin Eakes, whom I have admired for some
time. Like Elizabeth Warren, Eakes long ago had insights into sub-prime lending
that I wish more of us had taken seriously.At the conference, Martin worried about a conversation that emphasized the
need for robust underwriting standards for the mortgage market going forward.
The three most important standards are loan-to-value ratio, payment-to-income
ratio, and credit history. As Martin pointed out, African-Americans have less
wealth available for down-payment than others (even after controlling for
income), and have lower FICO scores than others, and therefore will be denied
access to credit at a greater rate than others if underwriting standards are
tough and uniform. Because much of the reason that African-Americans lack wealth
is because they have been systematically stripped of wealth for many
generations, policies that reduce access to credit disproportionately for
African-Americans violate fairness.The events of the past six or seven years show that loose underwriting does
nobody any favors, either. Foreclosures are terrible things for the families who
experience them and for the communities that have large numbers of them. The
whole point of underwriting is to prevent default and foreclosure, and the
unpleasant fact is that downpayment and FICO are predictors of likelihood of
default.In the era where almost all mortgages were self-amortizing, housing allowed
families to build wealth because mortgages were a form of forced saving. Those
who got a 20 year mortgage in 1960 owned their house free and clear in 1980;
households gained wealth not because housing was such a great investment, but
because they built equity, month after month. Housing was a particularly
attractive way for those of modest means to save, because they could live in the
very piggy bank they were building. In principle, however, these households
could have rented and taken the difference between a mortgage payment and a
rental payment and put it in another investment (a small business or the stock
market). But we know that in the absence of
nudges, people tend to save less.Perhaps, then, the government could come at the savings issue more directly
by giving low-income people a nudge toward saving. Suppose it developed a 401(k)
type plan that matched the savings of those with below-median incomes at 2 to 1.
This would encourage savings that then could be used for a down payment or a
host of other investments (say a Vanguard index fund). This would cost taxpayers
money, but perhaps less than mortgage programs built on thin underwriting
standards. At the same time, getting people into the habit of savings could
produce other social benefits as well. I am not sure such a plan is practical,
but I think we do need to think about how we can help people who have been
denied wealth for generations how to start accumulating assets without relying
entirely on the housing finance system to do it.We also need to ensure that when people with limited experience in such markets do participate in financial markets by buying houses, investing their savings, etc., they aren't steered toward products that are highly profitable for the originator, but not the best fit for the borrower/investor. It's my understanding that such behavior -- steering people into the wrong products -- explain part of the problems observed in subprime markets. Perhaps we need a consumer finance protection agency? And someone to lead it who understands these issues? However, it's not enough to simply provide advice about financial products. That will help, but some of this was fraud that needs to be prosecuted -- it won't stop otherwise.
Homosexual advocacy group not legitimately Catholic, military <b>...</b>
After receiving a letter from the group Catholics for Equality urging a change to the “Don't Ask, Don't Tell” policy, the Archbishop for Military Services responded, saying that the archdiocese's position is “clear.
Google <b>News</b> Now Eight Years Old
google-news-screenshot-old Google today announced on the official Google blog the eighth birthday of Google News. It's a huge milestone for the California-based search company, which launched the Google News service on the 22nd of ...
Scripting <b>News</b>: What kind of <b>news</b> system...?
And it's not okay that they're making a bid for exclusivity on the role of News System of the Future, and they can't even keep their servers running properly. Either you deliver the benefit of being the sole provider, or sorry (to ...
robert shumakeHomosexual advocacy group not legitimately Catholic, military <b>...</b>
After receiving a letter from the group Catholics for Equality urging a change to the “Don't Ask, Don't Tell” policy, the Archbishop for Military Services responded, saying that the archdiocese's position is “clear.
Google <b>News</b> Now Eight Years Old
google-news-screenshot-old Google today announced on the official Google blog the eighth birthday of Google News. It's a huge milestone for the California-based search company, which launched the Google News service on the 22nd of ...
Scripting <b>News</b>: What kind of <b>news</b> system...?
And it's not okay that they're making a bid for exclusivity on the role of News System of the Future, and they can't even keep their servers running properly. Either you deliver the benefit of being the sole provider, or sorry (to ...
Michael Burry became famous for selling their own toxic waste to the investment banks before the housing downturn. Bloomberg sat down with Burry this morning in a must see interview (video attached below):
On who is to blame for the financial crisis:
“My number one concern is that there has been a complete utter total abdication of personal responsibility though out our entire society. I don’t think anyone anywhere is taking blame themselves for what they did to contribute to the crisis. And again I think it gets back to that blame game. It is the most damaging thing we can do as a country is to blame a narrow set and not look within ourselves for what each of us did or didn’t do to the basic wrong that led to this mess.”“From the borrower to the average broker all the way to the federal reserve through Congress, the President, several Presidents, I think that this has been coming for awhile and there has been a lessening of the credit standards over a period of time that ultimately led to the kind of blow off top that we have.”
On the current housing market:
“It’s an artificial market. There are a tremendous number of homes where the home homeowner, I think it’s between 2.5 to 3 million homes, where the home homeowner are more than 9 months past due and are not giving notices that they are past due and they’re just living there for free. I actually know one that has been there for a few years without having to pay anything. I think that Fannie and Freddie are basically being used as special purpose vehicles by our government to support the housing market. The private mortgage market is practically nonexistent; 96-97% of mortgages are flowing through Fannie and Freddie now. I think Fannie and Freddie are exercising a tremendous amount of power over the market by withholding properties from sale and not forcing foreclosure, the foreclosure process. I think that it would be best for the government just completely got out of the mortgage market and let the housing, because home prices are a function of income the leverage applied.
On what he is investing in agriculture, real estate and gold:
“I believe that agricultural land, productive agricultural land with water on site, will be very valuable in the future. And I’ve put a good amount of money into that. So I’m investing in alternative investments as well as stocks.”
“I think there is some value in real estate. You have to buy it right. It’s not in general, that’s the problem. I think that there are an awful lot of people out there looking to buy these distressed properties out there and so you need to find special situations. That is how I’ve invested from the beginning. I’m looking for these special situations, these unique ideas and that’s true in real estate too.”
“In my situation I’d rather go long on housing itself, real estate itself. Depending on how you structure it, in the real market, in the physical market, you can get some pretty good deals and I’ve done some of that too.”
“Paulson is big in gold and that is something is interesting to me and given how I see the world playing out. Other than that, I’m just saying, other than gold I haven’t really bought into the other
On the danger of having more power for the Federal Reserve:
“Well, I don’t feel that the economic theories and policies that got us into this mess are the same policies and theories that will get us out of this mess. And more to the point, I don’t — I’m 100 percent sure that the policies and theories that got us into this mess won’t prevent the next mess from happening.
And that’s probably my biggest frustration with the whole process. I don’t think that — I think with all the blame on Wall Street and all the focus on Wall Street — the increase — the perp walks for Wall Street — these things, in a lot of ways, are non — are not very productive. I think it’s not very productive to blame a narrow set of individuals or a narrow set of institutions.
Nobody is taking time to blame anything that anybody in Congress did or the Fed did or the other businesses, you know, how the banks acted, how the mortgage brokers acted, how people acted, how borrowers acted. There’s — there’s a lot of blame to go around. And I think this blame game being oriented entirely toward Wall Street is — is not overall helpful.
On Goldman Sachs shutting down its proprietary trading business:
“I think that brokers should not trade for their own account in securities — and securities that are also available to their clients. I just don’t think that’s pa — that should be done. I think broking should be pretty boring — safe, boring, low return business. And I think the same is true for banks. They should be very safe, solid, indestructible businesses. And so there are — some of these seemingly Draconian measures, I think, do need to be taken.”
Part 1 – Where is the accountability?
Part 2 – Burry buys gold and farm land
Source: Bloomberg TV
——————————————————————————————————————————————————The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s). The opinions of all guest authors or contributors can and will differ from those of Mr. Roche. These opinions do not necessarily represent the opinions or investment decisions of Mr. Roche. The author(s) may or may not have a position in any security referenced herein and may or may not seek to do business with one another or companies mentioned via this website. Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
A brief note on comments – The increase in users in recent months has resulted in an increase in unproductive comments. Any user who engages in the use of racial epithets or uses the comment section as a place to insult other users will be banned from the site. The comment section is welcome to all readers who are interested in asking pertinent questions and/or engaging in thoughtful, intelligent, and productive debate. In short, just be nice. Thanks.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.
HTML clipboardRichard Green:
Is housing the best way for low-income people to build wealth?, by Richard Green:
I was thrilled to be invited to the Future of Housing Finance conference held at
the Treasury Department and co-sponsored by HUD this week. It was particularly
nice to be seated next to Self-Help's Martin Eakes, whom I have admired for some
time. Like Elizabeth Warren, Eakes long ago had insights into sub-prime lending
that I wish more of us had taken seriously.At the conference, Martin worried about a conversation that emphasized the
need for robust underwriting standards for the mortgage market going forward.
The three most important standards are loan-to-value ratio, payment-to-income
ratio, and credit history. As Martin pointed out, African-Americans have less
wealth available for down-payment than others (even after controlling for
income), and have lower FICO scores than others, and therefore will be denied
access to credit at a greater rate than others if underwriting standards are
tough and uniform. Because much of the reason that African-Americans lack wealth
is because they have been systematically stripped of wealth for many
generations, policies that reduce access to credit disproportionately for
African-Americans violate fairness.The events of the past six or seven years show that loose underwriting does
nobody any favors, either. Foreclosures are terrible things for the families who
experience them and for the communities that have large numbers of them. The
whole point of underwriting is to prevent default and foreclosure, and the
unpleasant fact is that downpayment and FICO are predictors of likelihood of
default.In the era where almost all mortgages were self-amortizing, housing allowed
families to build wealth because mortgages were a form of forced saving. Those
who got a 20 year mortgage in 1960 owned their house free and clear in 1980;
households gained wealth not because housing was such a great investment, but
because they built equity, month after month. Housing was a particularly
attractive way for those of modest means to save, because they could live in the
very piggy bank they were building. In principle, however, these households
could have rented and taken the difference between a mortgage payment and a
rental payment and put it in another investment (a small business or the stock
market). But we know that in the absence of
nudges, people tend to save less.Perhaps, then, the government could come at the savings issue more directly
by giving low-income people a nudge toward saving. Suppose it developed a 401(k)
type plan that matched the savings of those with below-median incomes at 2 to 1.
This would encourage savings that then could be used for a down payment or a
host of other investments (say a Vanguard index fund). This would cost taxpayers
money, but perhaps less than mortgage programs built on thin underwriting
standards. At the same time, getting people into the habit of savings could
produce other social benefits as well. I am not sure such a plan is practical,
but I think we do need to think about how we can help people who have been
denied wealth for generations how to start accumulating assets without relying
entirely on the housing finance system to do it.We also need to ensure that when people with limited experience in such markets do participate in financial markets by buying houses, investing their savings, etc., they aren't steered toward products that are highly profitable for the originator, but not the best fit for the borrower/investor. It's my understanding that such behavior -- steering people into the wrong products -- explain part of the problems observed in subprime markets. Perhaps we need a consumer finance protection agency? And someone to lead it who understands these issues? However, it's not enough to simply provide advice about financial products. That will help, but some of this was fraud that needs to be prosecuted -- it won't stop otherwise.
robert shumakeHomosexual advocacy group not legitimately Catholic, military <b>...</b>
After receiving a letter from the group Catholics for Equality urging a change to the “Don't Ask, Don't Tell” policy, the Archbishop for Military Services responded, saying that the archdiocese's position is “clear.
Google <b>News</b> Now Eight Years Old
google-news-screenshot-old Google today announced on the official Google blog the eighth birthday of Google News. It's a huge milestone for the California-based search company, which launched the Google News service on the 22nd of ...
Scripting <b>News</b>: What kind of <b>news</b> system...?
And it's not okay that they're making a bid for exclusivity on the role of News System of the Future, and they can't even keep their servers running properly. Either you deliver the benefit of being the sole provider, or sorry (to ...
robert shumakeHomosexual advocacy group not legitimately Catholic, military <b>...</b>
After receiving a letter from the group Catholics for Equality urging a change to the “Don't Ask, Don't Tell” policy, the Archbishop for Military Services responded, saying that the archdiocese's position is “clear.
Google <b>News</b> Now Eight Years Old
google-news-screenshot-old Google today announced on the official Google blog the eighth birthday of Google News. It's a huge milestone for the California-based search company, which launched the Google News service on the 22nd of ...
Scripting <b>News</b>: What kind of <b>news</b> system...?
And it's not okay that they're making a bid for exclusivity on the role of News System of the Future, and they can't even keep their servers running properly. Either you deliver the benefit of being the sole provider, or sorry (to ...
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