So Many Stupid People

Over the weekend we finally got around to seeing the movie “The Big Short”.  I kind of related to the dialogue, having started trading in 1970, and then starting this Blog in January 2008 as the fiasco was about to ignite.  The line in the movie that most jumped out at me was the one that is showing in the title line here today.  In writing this blog I do not interact with many readers other than those I know personally.  But that does allow me to know how the traders who figured out the 2000 and 2008 scenario felt, most people call you crazy.  I do keep in mind that by definition a contrarian play cannot have many believers.

I would say that stupid in probably not the correct word, maybe naive would be better.  As the dialogue in the movie points out, there were some crooks in the setup and if you were going to call anyone stupid it would probably be the people in Washington and upper echelons of Wall Street.  Start with Robert Rubin and Bill Clinton for orchestrating the rescission of Glass-Steagall, and as a backdrop the escalation of financial Engineering as the bedrock of capitalism in the mid-1990’s.

Now we are seeing the third bubble meet its day of reckoning, the first was Tech in 2000, the second was Housing in 2008, the third is Central Bank Balance sheets in 2016.