November 11, 2008

The Sand States

Here are excerpts from "The End" in Portfolio by Michael Lewis, author of Liar's Poker, on the financial collapse. His article is based on the recollections of Wall Streeters who shorted subprime mortgages:

The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada.

Last I checked 50% of the number of defaults were in the four sand states. I haven't seen any estimates of dollars defaulted in those four states, but I imagine it was 70% or higher.

Still, I'm not sure that "sand" is the truly relevant common characteristic of the sand states.

The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking home­owners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

More generally, the subprime market tapped a tranche of the American public that did not typically have anything to do with Wall Street. Lenders were making loans to people who, based on their credit ratings, were less creditworthy than 71 percent of the population. Eisman knew some of these people. One day, his housekeeper, a South American woman, told him that she was planning to buy a townhouse in Queens. “The price was absurd, and they were giving her a low-down-payment option-ARM,” says Eisman, who talked her into taking out a conventional fixed-rate mortgage. Next, the baby nurse he’d hired back in 1997 to take care of his newborn twin daughters phoned him. “She was this lovely woman from Jamaica,” he says. “One day she calls me and says she and her sister own five townhouses in Queens. I said, ‘How did that happen?’ ” It happened because after they bought the first one and its value rose, the lenders came and suggested they refinance and take out $250,000, which they used to buy another one. Then the price of that one rose too, and they repeated the experiment. “By the time they were done,” Eisman says, “they owned five of them, the market was falling, and they couldn’t make any of the payments.”

This small hedge fund started shorting big investment banks, then found out they could short the securitized bonds directly.

But the scarcity of truly crappy subprime-mortgage bonds no longer mattered. The big Wall Street firms had just made it possible to short even the tiniest and most obscure subprime-mortgage-backed bond by creating, in effect, a market of side bets. Instead of shorting the actual BBB bond, you could now enter into an agreement for a credit-default swap with Deutsche Bank or Goldman Sachs. It cost money to make this side bet, but nothing like what it cost to short the stocks, and the upside was far greater.

The arrangement bore the same relation to actual finance as fantasy football bears to the N.F.L. Eisman was perplexed in particular about why Wall Street firms would be coming to him and asking him to sell short. “What Lippman did, to his credit, was he came around several times to me and said, ‘Short this market,’ ” Eisman says. “In my entire life, I never saw a sell-side guy come in and say, ‘Short my market.’ ”

And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. ...

In retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) The default rate in Georgia was five times higher than that in Florida even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California’s was only 5 percent. Why?

Why? Because the bubble was worse in Florida and California than in Georgia and Indiana. In the sand states in the fall of 2006, there were still Greater Fools around who believed that Hispanicization meant an unending increase in home values. The idea never gets fully articulated -- are home prices high because Hispanics can pay high prices? Or are home prices high because non-Hispanics are desperately paying high home prices to get their kids away from public schools full of Hispanics? When you spell out the logical alternatives, neither one sounds terribly sustainable, but the point is that political correctness keeps people from thinking it through. Young Wall Streeters just all emotionally believed Diversity = Goodness = Money.

It's one of those ideas -- that a constant influx of Hispanics meant ever growing property values -- that people get in their heads vaguely, but aren't allowed to interrogate under our reigning worldview and our reigning EEOC regulations, under which Malcolm Gladwell makes a fortune and Charles Murray makes nothing lecturing corporations.

Moses actually flew down to Miami and wandered around neighborhoods built with subprime loans to see how bad things were. “He’d call me and say, ‘Oh my God, this is a calamity here,’ ” recalls Eisman. All that was required for the BBB bonds to go to zero was for the default rate on the underlying loans to reach 14 percent. Eisman thought that, in certain sections of the country, it would go far, far higher.

The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.

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. ...

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

Still, this leaves open the question of why the financial engineers chose strawberry pickers with $720,000 mortgages to replicate in order to place double or nothing bets. Why not replicate your bets on Steve Jobs? Why build mountains of leverage on top of the pebble of probability that the strawberry picker was going to pay back his mortgage or find an even greater fool wanting to pay a fortune to live among strawberry pickers?

My published articles are archived at iSteve.com -- Steve Sailer

43 comments:

rightsaidfred said...

Wow. No regulators in sight. Positive feedback among the greed class. Ramp to failure. Get a bailout from Washington. Throw a party.

ReticentMan said...

This is stunning

Anonymous said...

There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all.

Maybe a flow chart would help here...

annoyed said...

OMG

Well I guess capitalism is evil. Let's all put on matching unis to march in the parades that will be held for Obama over the next 2 or 3 decades.

jimbo said...

Steve, you're reaching here. his whole mess can be mcuh better explained by Hyman Minsky's Financial instability hypothesis than your need to greasy wetbacks as the cause of everything bad...

Anonymous said...

What has happened over the last few years would not have suprised Murray Rothbard in the least. Take one central bank, add some regulatory capture, a hugely expensive war, and a sprinkle of financial instrument 'innovation', and what do you get? The Panic of 2008.

Why are the econonimc f'ups caused by central bankers and swindlers never called 'Panics' anymore?

from http://en.wikipedia.org/wiki/Second_Bank_of_the_United_States

"After the war, despite the debt, the United States also experienced an economic boom, due to the devastation of the Napoleonic Wars. In particular, because of the damage to Europe's agricultural sector, the U.S. agricultural sector underwent an expansion. The Bank aided this boom through its lending, which encouraged speculation in land. This lending allowed almost anyone to borrow money and speculate in land, sometimes doubling or even tripling the prices of land. The land sales for 1819, alone, totaled some 55 million acres (220,000 km²). With such a boom, hardly anyone noticed the widespread fraud occurring at the Bank as well as the economic bubble that had been created.[4]

In the summer of 1818, the national bank managers realized the bank's massive over-extension, and instituted a policy of contraction and the calling in of loans. This recalling of loans simultaneously curtailed land sales and slowed the U.S. production boom due to the recovery of Europe. The result was the Panic of 1819 and the situation leading up to McCulloch v. Maryland 17 U.S. 316 (1819).[5]"

David Davenport said...

Still, this leaves open the question of why the financial engineers chose strawberry pickers with $720,000 mortgages to replicate in order to place double or nothing bets. Why not replicate your bets on Steve Jobs?

Is that a rhetorical question, Steve? Middle and upper socio-econ. ppl. -- people with a modicum of sense -- are less likely to sign up for mortgages too big to carry.

The way it worked, the original creditors -- mortage providers and sellers of mortgage-backed bonds --suffered no losses as long as the mortgage holder didn't get behind on payments during the first six months. That's all, the first six months. The mortgage bond sellers would provide a guarantee of no default for the first six months or so, that's all. After that, the buyers of the bonds were the ones with a problem.

So the mortgage issuers didn't care if the homebuyers were going to fall behind on payments in seven months or more!

I'm being long winded here. The gist of it is that some smarties would issue a mortgage and then profitably resell mortgage-backed paper to greater fools who assumed repsonsibility for losses after six months. Basic idea: real estate always goes up, real estate always makes money, so buy into it.

Greater fools = Yurpeons or Chinese or idiot US banks.

Follow the logic?

Anonymous said...

"In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000."

But why was this strawberry picker given the loan; greed or Political Correctness? Both?

Anonymous said...

Slightly OT: Steve, why don't you check out this excellent link describing homosexual radicals physically attacking a church service. The photo of the group in pink PLO-type outlaw face-covering bandanas is classic stuff:

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=80743

"Lesbians, condoms go wild in attack on Christian church"

Hmmm...is there such a thing as a hetero glass ceiling? Hmmm...have gays attempted violent coups in the past in order to attempt control of a society?

Hmmm...is it all aggressive In-Group Strategy or just civil rights?

Tell us, Steve-o.

TH said...

They should make a movie out of this. The protagonist would be a young Wall Street hotshot, with some poor hardworking Mexicans in bit roles. It would be a somber drama where the hero gradually realizes the evil of greed. Or perhaps they should make it a comedy.

testing99 said...

Anon the War was not that expensive, in fact ALL military spending is dwarfed by the spending on Social Programs.

Heritage Foundation has a set of charts showing the spending since the 1930's or so, Social Spending including the period after 9/11 shows up as the major part of expenses.

The Claremont Institute has some data too on National Defense vs. Social Spending

See also HEre

Where as noted we spend from 3% of GDP for defense on 9/11, to now a whopping 4%.

It's social spending that's busting the budget.

I don't think Steve Sailer's argument is the illegal aliens caused the recession. Merely that looking at how much loans were pushed their way in a massive con game enabled by PC multiculturalist attitudes made everything worse, and generated a "tipping point" where everything came crashing down in a giant ponzi scheme.

Regardless, Putin seems to have solved his problem with Chechens by using, well War. It's likely to be his play, in Eastern Europe, and frantic nuclear weapon development there also to stave off the conquering bear is the likely response. Nukes are a trump card for a weak state.

No state ever survived long without having both a sound military, and the ability to pay for it. Too much either way (miserly and no military, overspending on the military) has been cause for ruin. It seems we spend fairly little of late. Probably too little, given the massive "equalizer" that nukes with no certain return address or responsibility have.

Jun said...

Why not replicate your bets on Steve Jobs? Why build mountains of leverage on top of the pebble of probability that the strawberry picker was going to pay back his mortgage or find an even greater fool wanting to pay a fortune to live among strawberry pickers?

'Cause Steve Jobs is unlikely to default. Who's going to bet (take out a CDS) on Steve Jobs defaulting? He's not gonna, so why gamble on that?

The question is, why on earth anyone would underwrite (or whatever the correct term is) a CDS on the strawberry picker? No sane Las Vegas bookie would take that bet.

Obviously, the folks issuing CDSes must've been making oodles of money off of these somehow -- and that somehow was (at least in part) in big bonuses. Sell lots o' CDSes -- get lots o' big bonuses.

Oh -- and they didn't give a sh*t what happened to the company they happened to work for (eg. AIG) -- or, least of all, the economy or society at large. :-/

Lucius Vorenus said...

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.

Paging Nassim Nicholas Taleb...

Lucius Vorenus said...

Still, this leaves open the question of why the financial engineers chose strawberry pickers with $720,000 mortgages to replicate in order to place double or nothing bets.

Uhh, because deep down in their hearts, they knew that the gubmint would eventually back the paper, which is to say - they sensed [correctly] that there wasn't any real risk in it for themselves.

Anonymous said...

And the guy is named.... Steve of course!

Lucius Vorenus said...

TH: They should make a movie out of this. The protagonist would be a young Wall Street hotshot, with some poor hardworking Mexicans in bit roles. It would be a somber drama where the hero gradually realizes the evil of greed. Or perhaps they should make it a comedy.

To their credit, the folks at SNL did just that, but the suits at GE yanked it down and vanquished it to oblivion.

Anonymous said...

Of course, if the actual US money stock was based on something physical and tangible (as it supposedly was right up to 1971 when Nixon sneakily ended dollar/gold convertibility), then te whole madness could never have occurred since the actual 'physical money' representing all these spurious trades would never have existed in the first place ie an economy with a money stock that actually represented the value of its production could not 'physcially sustain' asset price inflation greater than the money stock.
- Nothing sophistacted here - just the basics Adan Smith would have understood when there was no such thing as paper money.

Anonymous said...

Sorry to go off-tangent Steve, but speaking of President Nixon, I am forcefully reminded of the excellent London stageplay 'Frost- Nixon' (currently being made into a Hollywood film), which of course is based on David Frost's famed post-Watergate filmed interviews of Nixon, in which Nixon was famously reduced to tears.
I came across a Youtube segment of Nixon's 1971 'gold convertibility broadcast'.I have read somewhere that Nixon was of partial Albanian descent.From watching the footage, I can believe this.
As a native of England I can honestly say that he doesn't look like any Englishman I have met.
George Bush senior may be of English descent, but his son George W. Bush also doesn't look English, the same with Sarah Palin.

Henry Canaday said...

As crazy as the whole thing sounds in retrospect, it may have made sense, at least at first. The global investors were using the local, low-wage borrowers to create not a robust loan asset, but a claim on a physical asset, a house and land in an area where housing prices were expected to rise.

All that was necessary for a continued rise in housing prices was further legal and immigration, which creates congestion and demand for all living space in certain urban areas and thus pushes prices for all housing prices up in the area and its surrounding suburbs.

But the prices of housing began to look unrealistic, even given further congestion, around, say, 2004. Enter Freddie and Fannie.

Kevin Hasset at AEI argues that Fannie and Freddie began to buy or guarantee 'junk loans' much more aggressively in 2006 and 2007, just when private investors may have become more wary of them. They did this, Hasset suspects, as a kind of penance for their earlier accounting scandals, and to placate Congressional Democrats' desire for more low-income and minority loans.

And they turned what would have been a real by manageable collapse into a global catastrophe.

Anonymous said...

The reason why they loaned money to the stawberry picker is simple. Recall, all they needed to have the picker do is make six paymnets.

Who do you think actually made those six payments.....?

Anonymous said...

LANEALUM

In the old days alchemists tried to make gold out of metal (lead), today our modern alchemist try to make money out of crap. Seems like sometimes history repeats, human nature being weak and subject to herd instincts and delusions.

Wade Nichols said...

"I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”"

At first read, I actually thought the bolded sentence read: "How quant."

Chris said...

Still, this leaves open the question of why the financial engineers chose strawberry pickers with $720,000 mortgages to replicate in order to place double or nothing bets. Why not replicate your bets on Steve Jobs?

a) As lucius says, they knew they'd get bailed out

b) Unless he's a fool, Steve Jobs isn't going to pay more than 5% or so on his loan. If they wanted 5%, there are a lot of places to get that. Esteban Trabajo, however, is going to get suckered in with a teaser rate and then jacked with a 8-10% rate when his mortgage adjusts. So long as housing prices rise, he'll be "OK" and the financiers will reap a 100% greater margin.

c) Combine b) with the magical thinking that REAL ESTATE ALWAYS GOES UP YOU JACKASS and these people probably told themselves that they were "helping" Esteban achieve the American dream and bringing in a "guaranteed" return at the same time.

eh said...

Still, this leaves open the question of why the financial engineers chose strawberry pickers with $720,000 mortgages to replicate in order to place double or nothing bets. Why not replicate your bets on Steve Jobs?

Because they were effectively working on commission/volume, and there are a lot more strawberry pickers than Steve Jobs's.

PRCalDude said...

"Steve, you're reaching here. his whole mess can be mcuh better explained by Hyman Minsky's Financial instability hypothesis than your need to greasy wetbacks as the cause of everything bad..."

Way to not actually read the piece. This article was about the complicity of the financial class in the entire debacle. Maybe the "greasy wetbacks" part is you reading your own racism into the article.

Mr. Anon said...

"testing99 said...

No state ever survived long without having both a sound military, and the ability to pay for it. Too much either way (miserly and no military, overspending on the military) has been cause for ruin. It seems we spend fairly little of late. Probably too little, given the massive "equalizer" that nukes with no certain return address or responsibility have."

Less important than how much we spend on the military is what we do with it. If we're sending our forces to every far flung corner of the globe to stick their noses into other people's problems, then their problems will become our problems. And the problem of nuclear weapons with "no certain return address" is not that big, given that we have the ability to send nuclear weapons by bulk-rate postage.

Leave it to Testing99 to claim that maintaining an entire army overseas in a warzone is not expensive.

"Jun said...
Obviously, the folks issuing CDSes must've been making oodles of money off of these somehow -- and that somehow was (at least in part) in big bonuses. Sell lots o' CDSes -- get lots o' big bonuses."

I believe a lot of it had to do with the fact that they were selling these CDOs to foreign investors, who had little or no idea of the forces that drive American housing markets. It's as if someone offered you the opportunity to buy a house at 3rd and Euclid in Peoria, Illinois, sight-unseen. They tell you it's a good bet, but you've never been there, so how can you know. 3rd and Euclid - is that in the ghetto, or in a posh suburb?

Then of course, as you point out, after the MOTUs have sucked their millions out of their firms in the form of pay and bonuses, they don't necessarily care what happens anymore. THEY got paid.

As to Michael Lewis' article - give him credit for sniffing out what he has. He's always been a shrewd observer of the Wall Street crowd, and largely has their number. But he's a good liberal (and I use the phrase in the same sense as in a "good german"), so he'll never come to the conclusions that the facts are pointing him to.

obrien aka birch barlow said...

Steve, you're reaching here. his whole mess can be mcuh better explained by Hyman Minsky's Financial instability hypothesis than your need to greasy wetbacks as the cause of everything bad...

Low IQ people pretty much *are* the cause of almost everything bad. Given that roughly 75% of Mestizos have an IQ below the white median of 100 (which itself isn't impressive), AND that the Mestizo population is growing rapidly, AND that almost no one wants to do anything about it, it seems like mentioning Latin immigration is valid in almost any area which dumb people cause problems (which is practically every area).

Worse yet, the few Mestizos who should be pumping out 19 kids aren't doing it--the birthrate of educated (and presumably high IQ) Mestizos is similar to the paltry upper-middle class white birthrate.

On a somewhat related topic, the rents in SoCal are downright scandalous. I mean $800/mo for a studio apartment in the barrio? That's pure insanity. The ratio of lodging costs to entry level wages is probably higher in SoCal in 2008 than it was in the U.S. overall during the Great Depression (80 hours @ $10 an hour...for someone who can only get a job for 30 hrs/wk, that's something like 70-80% of of their take-home pay). Almost all of this rent inflation is thanks to totally uncontrolled immigration. Contrary to the beliefs of the open borders lobby immigrants aren't rushing to live in North Dakota. Immigrants are moving to already highly populated areas, so to say that immigration does not contribute to overcrowding or insane living costs is simply a lie.

Worse yet, many on the left support onerous environmental regulations in addition to open borders. Sorry leftist ideologues, strong environmentalism and open borders are mutually exclusive. To the extent that these policies coexist, they lead to nothing but misery...hours in traffic, grossly inflated housing costs, and all the rest that comes with overcrowding.

Now of course the financial problems caused by high rents can be avoided if you have multiple people living in a single room, but most people do not consider this a desirable situation. Also, if you're somewhat of a lone wolf, even if you are willing to tolerate such living conditions, you are pretty much screwed.

I cannot help but feel contempt and downright hatred for those who are open borders, and claim to be environmentalists or advocates for the poor, or for the homeless. I would imagine that the rate of homelessness in SoCal is far higher than it was 15 years ago thanks to open borders, and to a lesser extent environmental overregulation. The bottom line: leftist ideology, like any rigid ideology, is internally inconsistent, and SoCal is a perfect example of this.

testing99 said...

No, Mr. Anon, it is not expensive considering the alternative.

Just like the whole business of giving a 270,000 dollar loan to a strawberry picker was ... good pickings for the Ponzi scheme folks who raked in the money, and disastrous for American taxpayers as a whole, so too is withdrawing into neo-isolationism.


To a huge extent, world-wide prosperity has been purchased by America's defense shield. Paleocons and Liberals argue that somehow this did not take place, and instead human nature magically changed. Instead of the global defense shield which has to be proved again periodically to deter potential threats, buying what amounts to Global Peace. The Pax Americana, which in the age of nuclear weapons benefits the US too.

The alternative to having the military (expensively) kicking behinds in Iraq and Afghanistan and doubtless other places is not saving money but ... an explosion of nuclear proliferation as nations look for insurance.

Already Poland is rumored to have begun a crash nuclear program because Obama hung them out to dry predictably on the Missile Defense shield and protection (which is what it's really all about) from Russia.

If nations don't get protection one way they can buy it themselves with nukes another way. Which ends in those nukes being used.

Just as you could argue that failure to extend a rational, reasonable credit market to illegals, where they pay perhaps 7% on very modest loans helped create the Ponzi scheme that was the heart of Freddie-Fannie.

Failure to create a reasonable, rational, coherent system in credit or defense, and one that is moreover stable and predictable, leads inexorably to desire for a wild, risky, "bet it all" system.

Anonymous said...

George Bush senior may be of English descent, but his son George W. Bush also doesn't look English, the same with Sarah Palin.

Given Sarah Palin's dark looks, I would be surprised if she didn't have some Mediterranean blood from somewhere. Then again, the English and Irish have some admixture from southern Europe, no?

Anonymous said...

"Low IQ people pretty much *are* the cause of almost everything bad."

"I cannot help but feel contempt and downright hatred for those who are open borders, and claim to be environmentalists or advocates for the poor, or for the homeless."

This two statements seem to be in conflict with one another. I'm guessing most supporters of open borders have, on average, higher IQs than those who are opposed to them.

"Just like the whole business of giving a 270,000 dollar loan to a strawberry picker was ... good pickings for the Ponzi scheme folks who raked in the money, and disastrous for American taxpayers as a whole, so too is withdrawing into neo-isolationism."

The Russian economy in the 90's was one big Ponzi scheme, making a few select financiers fabulously wealthy, all I'm sure, with high IQs.

kurt9 said...

Low IQ people pretty much *are* the cause of almost everything bad.

This is a rather daft comment to make in the context of this article on the death of Wall Street. Read the article again. It is clear that the high IQ people who staff the investment banking community were just as deluded, if not more so, than all of those "mestizos" you seem to think are the problem. It is the high IQ people on Wall Street that spent the past 15 years creating the house of cards that is now falling down before our very eyes.

Anonymous said...

Steve, you're reaching here. his whole mess can be mcuh better explained by Hyman Minsky's Financial instability hypothesis ...

Until I googled Hyman Minsky I thought this was a Jewish joke.

KingM said...

They're called the "sand states" because of the Biblical parable of the foolish man who built his house upon the sand, rather than any geologic similarity among the four states in question.

Anonymous said...

The Russian economy in the 90's was one big Ponzi scheme, making a few select financiers fabulously wealthy, all I'm sure, with high IQs.

Hmm, you could be onto something there. I wonder if these select financiers had anything else in common, other than high IQ?

Anonymous said...

I wonder if these select financiers had anything else in common, other than high IQ?

Um, they were Russians?

anony-mouse said...

Its interesting to go to website after website and find different people being blamed for the same mess.

Of course it doesn't mean that more than one of them (or all of them) is right.

Anonymous said...

"Young Wall Streeters just all emotionally believed Diversity = Goodness = Money."

Ummm, no. Have you been around a lot of young wall streeters? Young (or old) hedge fund types?

n/a said...

About 2/3 of George W. Bush's ancestry appears to be English. In total around 3/4 of his ancestry appears to come from the British isles. As for why he looks so strange, Fetal Alcohol Syndrome has been suggested.

Then again, the English and Irish have some admixture from southern Europe, no?

No.

Lucius Vorenus said...

So I guess my observation about tribalism got censored?

Anonymous said...

Furthermore, on the subject of Richard Nixon, he seems to have gone down in modern American history and folklore as some kind of a manichaen 'dark' figure playing Satan to JFK's Jesus Christ.
Nixon's dark, dog-like looks and hanging jowls did not help, neither did his deep voice add this to Watergate and the covert Vietnam bombings (ie the hatefully named 'Operations Breakfast, Lunch, Snack' etc), and we see the makings of a lefty hate-figure.
And of course, there were the famous 'expletive deleted' Watergate tapes (Nixon as well as being a dipsomaniac was a paranoid obsessive who bugged everything in sight), we see a deeply unattractive, though flawed figure who somehow represents the dark side of the repressed psyche.
"I couldn't give a sh*t about the Italian Lira" was perhaps the choicest parcel dredged from the Nixon Tapes.
All this, of course happened in a tumultuous time in American History typified by the emergence of hard-core porn {'Deep Throat' was significant in more than one way in the Nixn years) , 'porno-chic', a deep seated national malaise, defeat in Vietnam and a turbulent global economy.
Perhaps the strangest phenomenom was in the latter years Nixon was somehow rehabilitated and cast as a 'loveable scamp' and a 'cuddly' cartoon-devil complete with a comedy red-devil suit, horns, tail and pitch-fork a la the famous 'Kroft puppets' depictation.

Anonymous said...

Sarah Palin's "dark looks" must indicate med ancestry? Geesh. Some of you people must stop a 2nd grade cartoon caricatures,probably from the 1950s.
"Dark looks" have always been fairly (!) common in the Isles. The Welsh are famous for that look, often combined with rather almond shaped eyes. People of mixed Indian/British lineage would sometimes claim they were "Welsh." The attribution of black Irish to the Spanish Armada is silly, not only because the Spanish were not all that dark, but because dark-haired Irish go way back and there were not enough ship wrecked Spaniard to account for them all. There is an area in southern Scotland (near northern England for the geographically challenged) that was known for "dark" types for centuries. I read a novel from the 60s that referred to this, but can't recall the title.
Anne Boleyn was olive skinned and dark haired. The Spanish Queen Catherine was as red-haired as her husban Henry VIII.
The Romans were in the British Isles for quite a while,but as in the case of the Irish/Spanish connection, that doesn't explain it all.
The earlist people may have been "Iberians". I don't know if this theory is still current, but it's been around a long time. The Iberians were a stock, dark type, sort of like we think of as Mediterraneans.

michael t said...

The alternative to having the military (expensively) kicking behinds in Iraq and Afghanistan and doubtless other places is not saving money but ... an explosion of nuclear proliferation as nations look for insurance.


Attacking countries and surrounding your "enemies" (Iran), doesn't lead to nuclear proliferation, leaving them alone does.

Such "logic" would be easier to swallow if it were openly partisan. Trying to pass it off as serious analysis risks important people believing it. That's why serious people were duped by the neocons: they thought the neocons were being sober and sincere.

Lucius Vorenus said...

Anonymous: Hmm, you could be onto something there. I wonder if these select financiers had anything else in common, other than high IQ?

Hey, how come his observation about tribalism doesn't get censored?