Sunday, Feb 14, 2010
Swindle and incompetence
Greg Pytel: Comment to "The largest heist in history"
Clear explanation how it all went bust. Worth reading.
It also puts a publication in The Times “The Times: UK economy cries out for credible rescue plan” (see article linked below) into proper perspective. Both worth reading together.
Posted by ant @ 07:54 AM (713 views) Add Comment
13 Comments
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1. stillthinking said...
I can't help but think that Pytel needs to spend a little longer on analogies and improve his explanation. All he ever does is write basically a paragraph while saying its obvious, and then wonder why his excellent points are never picked up by the mainstream media.
2. ant said...
Pytel is indeed naive to wonder why his arguments do not make into the mainstream media. Generally most of financial journalists are quite thick and are unable to understand his arguments. A few ones who are not are unlikely to step out of line. Simple, innit?
Pytel actually gave a really good analogy of Albanian pyramids. (And I think he also gave some others.) As to improving explanation this is a tough one. You either understand basic maths and Pytel's arguments are simple. If you do not, nothing can help.
3. tpbeta said...
I think you'll find that Pytel is the only man intelligent enough to see the truth and the only one courageous enough to tell it. As the Goldman Sacks guy put it, you either get it or you don't.
4. ant said...
If you followed Pytel's blog comments you would find out that he is not the only guy. Apart from ordinary folk, for example, Hugh Hendry in an interview with Jeff Randall confirmed that Pytel's analysis is correct as he stated:
"Loans should never be greater than deposits"
(http://www.youtube.com/watch?v=Dl5ebMGgtOk - at 7:20 of the interview, almost the end).
"You either get it or you don't". Exactly.
5. ant said...
@tpbeta: why don't you put any argument on the merits on Pytel's blog? If you agree with him say so, if you do not uncover Pytel's flaws (if any). The discussion should be on merits not some cheap and rather impolite personal arguments. Forgive me that this does not come across and particularly intelligent and honest.
6. tpbeta said...
@Ant: I don't "put any argument on the merits on Pytel's blog" becasue I don't particularly dissent from many of 'his' views, though I find them somewhat overstated and under-researched.
What grates is the repeated implication that anyone who thinks otherwise is stupid or villainous or that there is much new or original to him in this kind of thinking. All those self-promotional puffs on his web blog and constant attempts at association with people who have probably never given him a second thought - like your comment about Hugh Hendry above.
7. letthemfall said...
Interesting post ant. The way the financial instruments form the pyramid is complex, but the upshot is not - that a great deal of money was funnelled into the hands of relatively few people and that asset prices took off.
It does not surprise me one iota that most people do not grasp the situation. Most struggle to understand the fallacy in chain letters, and to be fair these things are not immediately obvious to the majority.
I think the solution given in the article - unwind the structures and bring the architects to book - is the right one. Financial collapses do not destroy value and wealth (except in certain cases - crumbling US houses for example), but redistribute ownership of that wealth. This should be addressed.
That the Govt is continuing to support these structures (in the hope that they will gradually disentangle) is one I think most of us here agree is happening, although object to. One consequence is the maintenance of house prices. In my view this highlights the futility and intrinsic unfairness in demanding deep cuts in the public sector finances. All this will do is the hurt those who have had nothing to do with all this, while allowing the true culprits to continue to get away with it.
8. ant said...
Thanks tpbeta: let's deal in point by point manner:
1. Which of his views you find "under-researched"? I.e. which of his views (forget opinions, I do not care about them) lack substance or have holes in the proofs provided.
2. Pytel does not imply "that anyone who thinks otherwise is stupid or villainous". In fact he clearly points out that people not responsible for banking have all the right even not to have any view. It is people who were in charge of the financial system are "stupid or villainous" as they engineered or allowed to engineer the current crisis. To me his blog clearly proved that point. (I would agree that Pytel might overstate this, but frankly I do not care about. Argument of overstating is vacuous as it does not imply any fault: this up to your opinion.)
3. It may well be the case that "there is much new or original to him in this kind of thinking". Please provide links to relevant stuff to prove your point. I would be very interested. I follow this crisis and could not find anything as coherent and complete as Pytel's model explaining the causes and mechanics. (Quotes like the ones made by Hugh Hendry that I gave are not sufficient. I can find a few of those. They are simply opinions - which in case of Hendry was correct - but they do not constitute strict analysis, with models and calculations that prove them.)
Blogs generally should have substance and I believe Pytel's blog has it. And they are also for self-promotion, like all the media. Practically all the people in the media, Gillian Tett, Martin Wolf, Hugh Hendry, Vince Cable are products of self-promotion. Any journalist, analyst, expert, etc. whether s/he appears on the media on merits or because s/he has relatives in the right places is doing self-promotion. Nothing wrong with that, even if some of them sometimes talk complete drivels. If you do not understand that, I cannot help.
Somehow your tactics is to criticise Pytel in a "safe" and general way with wide sweeping judgements (you gave no solid arguments/examples to justify your views) and then put across mildly disparaging comments. Again, forgive me, but this sort of attitude does not come across as particularly honest or intelligent.
9. ant said...
@letthemfall:
you wrote:
"Financial collapses do not destroy value and wealth (except in certain cases - crumbling US houses for example), but redistribute ownership of that wealth. This should be addressed."
This is absolutely brilliant observation!
10. Amadeus said...
...anyone seen ant and Pytel together?
11. rumble said...
"Financial collapses do not destroy value and wealth (except in certain cases - crumbling US houses for example), but redistribute ownership of that wealth. This should be addressed." (In a socialist environment).
Ant, is that youtube video working for you?
12. ant said...
@rumble: you additions clearly show that you do not understand the sentence you commented on. I am leissez-faire, pro free market. No a believer in socialism for the rich as we have now in the US.
13. rumble said...
It's not working for me either.