At the Annual Meeting, Buffett said that everyone thought that housing prices would always go up, implying that was the reason for all of the bad lending. But Tavakoli says it isn't that benign.
Respectfully disagree. I believe this review from the late Greg Newton on Seeking Alpha is on the mark: http://seekingalpha.com/article/113943-no-mere-buffett-a-14-course-menu NO MERE BUFFETT, A 14-COURSE MENU Dear Mr. Buffett What an Investor Learns 1269 Miles from Wall Street by Janet Tavakoli Wiley 2009 $24.95 (list) Hardcover Chicago derivatives consultant Janet Tavakoli is a rare jewel in the financial markets. Arguably best known for weighty textbooks with such alluring titles as âStructured Finance & Collateralized Debt Obligations,â she has a nice sideline in delivering uniquely pungent commentary on credit-related conundra in venues including her own website, US Securities and Exchange Commission comment filings, and on-the-record in the allegedly grown-up media where âpeople familiar with the matterâ usually lurk. Most remarkably, she deserves as much acclaim as anybody, and much more than most claimants, for calling both the cliff-edge and the depth of the ravine into which global capital markets have tumbled. But another Buffett hagiography? Is anything left to be said about Avuncular of Omaha, the genial great white with a penchant for apparently ignoring his own epithets (especially that one about âfinancial weapons of mass destructionâ)? Just in the last few months weâve had âThe Snowball,â Alice Schroederâs near 1000-page authorized doorstop; Roger Lowensteinâs âBuffett: The Making of an American Capitalist;â and âPilgrimage to Warren Buffettâs Omaha,â Jeff Matthewsâ dispatches from the Berkshire Hathaway annual meeting. Among plenty of others. But this book is much more than mere make-weight for Barnes & Nobleâs Buffettophilia section. It is just as much the first of what will doubtless be dozens of books telling the story behind the global dodgy asset securitization scam, which Tavakoli, noting the first breathless Madoff Meltdown headlines, recently characterized as the real âlargest Ponzi scheme in the history of the capital markets.â "IT'S GREAT TO HAVE AN OPEN MIND, BUT DON'T LEAVE IT SO OPEN THAT YOUR BRAINS FALL OUT" A long-time Buffett fan and Berkshire Hathaway shareholder, Tavakoli builds her plot around a fitful correspondence that turned into an afternoon in Omaha where her low expectations â âIf Warren had simply avoided overt rudeness, it would have been an upgrade from most finance professionalsâ she had dealt with â were dashed on the rocks of mutual respect and a shared thesis, in the dog days of late summer 2005, that the world had strapped itself into a handbasket headed straight to financial hell. The narrative lives up to the bookâs title as Tavakoli holds her personal portfolio decisions to Buffettâs standards, contrasting his philosophy and behavior with those of a long roll-call of Icaruses on such topics as transparency, complexity (or relative lack thereof), risk comprehension (and tolerance), leverage (in both its overt and covert forms) and that little something that mostly comes across as, for want of a better word, honesty. She even indulges a little Buffett-like do-as-I-say, not-as-I-do: âI run a hedge fund. My strategy? Itâs proprietary...but you are not entitled to that much information,â setting up familiar arguments about the impact of fees, liquidity, the fragility of genius and various other demerits of the âasset classâ now well down the road toward a well-deserved bout with humility. So far, so Buffett. But the bookâs real strength is the sub-plot that emerges as Tavakoli tugs vigorously at the seemingly disparate threads of the current financial crisis, naming names, citing cases and leaving no schmuck â whether investment bank, credit rating agency, monoline insurer, mortgage brokers, regulators and their ilk â unspared. Based on more than 20 years in the derivatives arena, and having served time at Salomon Bros, Bear Stearns and Goldman Sachs, she knows that of what and who she speaks. âDear Mr Buffettâ is, like its author, strongly, often harshly, and, more than rarely, tartly, opinionated. The attitude is, however, well-supported by the facts; should anyone ever display the slightest interest in criminalizing the criminals who led us down this path, a prosecutor could do worse than ordering up copies for the grand jury. One thing the world is not going to run out any time soon is books on subprime credit-turned-global financial meltdown. But itâs doubtful that many, or any, will so closely match the ripping yarn of financial upset with concepts that any â and perhaps every â investor can apply to their own financial security. This book was already at the printer when the Madoff Maelstrom broke, but itâs highly doubtful that anybody who absorbs the message of âDear Mr Buffettâ will ever need confront that kind of mayhem. http://www.amazon.com/Dear-Mr-Buffe...bs_sr_1?ie=UTF8&s=books&qid=1241483645&sr=8-1 <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/WA20Am0pwtA&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/WA20Am0pwtA&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
... that reps and dems are equally responsible. it was the bipartisan assumption that living on credit can last. iraq. funny freddie. shrinking saving rate balanced by real estate and stock gains. easy money by greenspan, bailing the sp out of ever flu ... get over it. a system has ended. a bipartisan system.