seems to be busy about business, would allow a
capitalist to spoil the party.
This revolutionary, Michael Lewis, wears the right
suits but espouses such radical capitalism that he
will cause shockwaves to emanate across the web.
He says, the banks should have tried a Capitalist
Sandwich in 2008. If they opened up that sandwich
and found it empty, or full of maggots, then that's
tough sh*t.
[a Wish Sandwich]
checkit: Bizweek
Michael Lewis on the Next Crisis
By Brad Wieners September 12, 2013
Sept. 9, 2013:
Sales of Lewis’s The Big Short reach 691,000 print copies in the U.S.
Sales of Lewis’s The Big Short reach 691,000 print copies in the U.S.
Was Lehman unjustly singled out when it was allowed to fail?
Lehman Brothers was the only one that experienced justice. They should’ve all been left to the mercy of the marketplace. I don’t feel, oh, how sad that Lehman went down. I feel, how sad that Goldman Sachs (GS) and Morgan Stanley (MS) didn’t follow. I would’ve liked to have seen the crisis play itself out more. The problem is, we would’ve all paid the price. It’s a close call, but I think the long-term effects would’ve been better.
What surprised you most while reporting on the crisis?
The realization that it had actually paid for everyone to behave the way they behaved. Working on The Big Short, I first thought of it as this bet, and there were winners and losers on both sides of the bet. In one sense there was—but on Wall Street, even the losers got rich. So that was the thing I couldn’t get out of my head: that failure was so well-rewarded. It wasn’t that they’d been foolish and idiotic. They’d been incentivized to do disastrous things.
Henry Paulson, the man behind the bank bailouts, recently said, “The root cause of every financial crisis is flawed government policies.” Is that fair?
Some of the government’s policies have been idiotic. But the idea that the story begins and ends with government policy is insane. Wall Street, all by itself, orchestrated the crisis by a web of deceit that was breathtaking. If Wall Street continues to operate in that spirit, I would argue that there’s almost nothing the government can do to prevent them from doing bad things. Incentives are at the bottom of it all. At the gambling end of Wall Street, the people who are making decisions are making decisions not with their money, but with other people’s money, [so] they themselves are not personally responsible.
The other things at the bottom of it all are core to the human condition—optimism, gullibility, greed, panic. Is there any way, finally, to prevent people from behaving this way?
Yeah, what can you do? Well, you can lessen the reward for behaving this way. You can punish people more for behaving in this way. Part of this story is the story of a moral problem, and the moral problem grows out of the change in the structure of Wall Street. When there were partnerships and people’s money was on the line … they were encouraged to behave in ways that were to the long-term benefit of the organizations they belonged to. Long-term behavior is just much different from short-term behavior—it encourages a different morality. And for several decades on Wall Street, the short-term sensibility has been encouraged and compensated very highly. So what you’ve got is a culture that is all about that. Whether they say it or not, that’s sort of the water in which the fish swim. I think as a result you have, basically, total neglect of social responsibility....
