ONE MAN'S OPINION

Kobe & Lebron - who's better? who cares?

Rush Limbaugh: "I want Barack Obama to fail"
How stupid is this statement? Let's say you have a ship. A big ship. A titanic ship. And it hits something big. Say an iceberg. Which rips a hole in the side and the big titanic ship starts taking on water and will very quickly sink if nothing is done. Now, you have 2 different groups of people on this titanic ship. Group A are plumbers and group B are welders. Group A says they can keep bailing water and keep the ship afloat until they reach a port and group B says they can successfully weld the hole shut and keep the ship afloat. Only one project can be done. Say, for whatever reason, the captain decides to pursue group A's proposal (the plumbers). Rush Limbaugh et al saying they hope Obama fails is like the welders saying they hope the plumbers fail. THEY ARE ALL ON THE SAME SINKING SHIP. IF THE PLUMBERS FAIL THE WELDERS DIE TOO.

This I believe
After listening to everyone point fingers for the last 4-6 months about what got us in this financial mess, here's what I think.
I think it's easy to blame the last administration for the mess, but I think the groundwork was laid maybe 15-20 years ago. I remember back in college in the late 1980s one of my finance professors commented on a new type of asset called a derivative. I remember him saying don't mess with them, that nobody understood them. Then about 5 years later Orange County California went bankrupt messing with them. So no, I don't think this was all the Bush Administration's fault. I think that the last 8 years a few things happened, specifically the financial institutions began to take full advantage of the lack of regulation and CEOs of financial institutions were pushed to match the returns of their competitors, competitors who were probably using more risky strategies and leveraging their companies more than they were letting on.
(Leverage is not necessarily a bad thing. Banks use leverage every day to make loans for mortgages, cars and small businesses, leveraging the deposits that you and I make.) Large financial institutions were leveraging their assets, borrowing more and more, and trying to hedge their bets with an insurance that wasn't really insurance. The problem was that since there was no regulation on this non-insurance insurance, it was like printing money, or more accurately, printing IOUs. What we've come to realize is that so many company's books were full of assets that someone else told them was worth something, but no one did their own due diligence to verify that the assets really had any value, and the sanctioned rating institutions were blessing the assets without doing their own due diligence.

More and more people are coming forward saying they tried to warn the SEC about Madoff, that they knew within 15 minutes of reviewing his returns that he was not on the up and up. I think no one wanted to believe that he was lying because it would mean they would have to do due diligence - the main action they are paid for - on so many other investments. It's like everyone kinda knew something wasn't right, but no one wanted to be the one to open that Pandora's Box, because 1) it would probably negatively impact their bonuses and 2) it would put a spotlight on what they hadn't been doing for years, namely due diligence. Why do I think anyone would just worry about their bonus? Because on the one hand, you are looking at an 8 figure bonus (no decimal places) if you keep quiet, on the other, you might be looking at losing your job if you say anything, and the game will still go on. Why not keep playing? Everyone was assuming that everyone else did due diligence so they didn't have to. On top of that, everyone knew their own books had crap in them, but they all thought they were the only one in that position.