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Dimon [Head Of J P Morgan] Admitted A Crucial Blunder Was "how We Just Missed That Housing Prices Don't Go Up Forever."


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HOLA441

Wall Street's leading bankers admit: we made mistakes...

Dimon [head of J P Morgan] admitted a crucial blunder was "how we just missed that housing prices don't go up forever."

The commission's vice chairman, former congressman Bill Thomas, a Republican, said the inquiry would try "to get to the bottom of what happened and explain it in a way that the American people can understand". Thomas said one important question was: "If you knew then what you do now, what would you have done differently?" Dimon admitted a crucial blunder was "how we just missed that housing prices don't go up forever."

http://www.guardian.co.uk/business/2010/jan/13/financial-crisis-inquiry-mistakes

:D:D Does he REALLY expect us to believe that??? :P :angry:

Words FAIL me...... I am GENUINELY gob-smacked......

This has to be THE Quote of the Century.....

Edited by eric pebble
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HOLA445

He's very smart to say that.

It wasn't just him who "believed" that, it was almost the entire nation.

Good way to share the blame.

Smart:

adjective

1 informal having or showing a quick-witted intelligence : if he was that smart he would never have been tricked.

Cunning:

adjective

1 having or showing skill in achieving one's ends by deceit or evasion : a cunning look came into his eyes.

Which one is he?

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HOLA446

Good found Eric; an astounding quote.

It overshadows the next excellent one though:

John Mack, head of Morgan Stanley, delivered a long lecture about how good his risk management was at Morgan Stanley, with stress-tests for all scenarios. But then when he was asked whether his bank had stress-tested for a fall in the housing market he admitted: "No, that was one we missed."

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HOLA449

Belief is the new defence for deeds past that were obviously stupid.

TOny Blair BELIEVED WMD and 45 minutes.

Bankers Believed their clever scam.

How do you prosecute for fraud when Belief is the defence.....the prosecution have to prove the INTENTION to deceive. If they believed, the intention is not there.

SIMPLES.

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HOLA4410

Good found Eric; an astounding quote.

It overshadows the next excellent one though:

John Mack, head of Morgan Stanley, delivered a long lecture about how good his risk management was at Morgan Stanley, with stress-tests for all scenarios. But then when he was asked whether his bank had stress-tested for a fall in the housing market he admitted: "No, that was one we missed."

I was about to copy and paste that Frank, but you have already done it.......

So the head of Morgan Stanley is proud of his teams risk management and ' stress testing of all scenarios', but despite (i assume) being up to their neck in Mortgage backed securities, they do not even contemplate that an asset that has risen dramatically and rapidly in a short period of time, might also fall in value!!!

They are either so stupid that they should be fired OR

They are so negligent that they should be fired and sued OR

They were aware and ignored the risk due to greed, which to my mind should be criminal.

*******!

Edited by Hip to be bear
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HOLA4411

They are either so stupid that they should be fired OR

They are so negligent that they should be fired and sued OR

They were aware and ignored the risk due to greed, which to my mind should be criminal.

OR they are looking two moves ahead and planting the "no one, including us, foresaw this" meme as the least bad option so they cannot be blamed for knowingly and cynically pumping the market.

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HOLA4412

When you're answering to investors (i.e. a big chunk of the general public via direct investments and pensions) it is really hard to be a contrarian. People here have been calling HPC since 2003 probably - but if they'd have been running banks, they'd have been fired in 2004, 2005, 2006, 2007, 2008. They'd have been heroes in 2009, but they wouldn't be in the job by then. So these guys filled their boots, because everyone else was - it became normal. My thought is that if they are really worth what they are paid, they should have ridden the boom, then got the hell out before it crashed.

It was the same in the .com boom. I remember in 1998 thinking the world had gone mad - it had to fall apart, and I got to the point where I doubted my sanity on investments. Everyone else was getting rich, and I was still hunting yield. Felt pretty smug in 2000 - but the reality is that there were people who did well and got out in time.

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HOLA4413
However, the bankers insisted that regulators played a role in the crisis, arguing that they failed to keep up with the proliferation of new, sophisticated financial products – such as mortgage-backed securities and credit insurance – and lacked authority to police the growing markets.

"In many instances, stronger regulation may have been able to prevent some of the problems," Dimon said in his prepared testimony.

Sound familiar? It was within the rules!!

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HOLA4414

Belief is the new defence for deeds past that were obviously stupid.

TOny Blair BELIEVED WMD and 45 minutes.

Bankers Believed their clever scam.

How do you prosecute for fraud when Belief is the defence.....the prosecution have to prove the INTENTION to deceive. If they believed, the intention is not there.

SIMPLES.

It's a lot like the way that 'Acting under orders' is not a defence for war crimes. These people had a duty of care - and were paid quite mind-boggling sums on this basis - so they have to take responsibility.

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HOLA4415

Sound familiar? It was within the rules!!

It's like car makers coming up with a new model every other week, and being allowed to sell them until a massively understaffed testing agency gets around to proving them unsafe, whilst the car makers vigorously campaign to have the testing agency shrunk or abolished.

The emphasis should always be on the maker of a product to demonstrate safety, not sell a product until safety has been demonstrated and take full responsibility if their product proves dangerous/defective. Apparently the bankers don't believe that this applies to them..

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HOLA4418

When you're answering to investors (i.e. a big chunk of the general public via direct investments and pensions) it is really hard to be a contrarian. People here have been calling HPC since 2003 probably - but if they'd have been running banks, they'd have been fired in 2004, 2005, 2006, 2007, 2008. They'd have been heroes in 2009, but they wouldn't be in the job by then. So these guys filled their boots, because everyone else was - it became normal. My thought is that if they are really worth what they are paid, they should have ridden the boom, then got the hell out before it crashed.

like Barclays Bank - do you know the criticism they came in for for deliberately pricing their mortgages uncompetitively?

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HOLA4419

When you're answering to investors (i.e. a big chunk of the general public via direct investments and pensions) it is really hard to be a contrarian. People here have been calling HPC since 2003 probably - but if they'd have been running banks, they'd have been fired in 2004, 2005, 2006, 2007, 2008. They'd have been heroes in 2009, but they wouldn't be in the job by then. So these guys filled their boots, because everyone else was - it became normal. My thought is that if they are really worth what they are paid, they should have ridden the boom, then got the hell out before it crashed.

It was the same in the .com boom. I remember in 1998 thinking the world had gone mad - it had to fall apart, and I got to the point where I doubted my sanity on investments. Everyone else was getting rich, and I was still hunting yield. Felt pretty smug in 2000 - but the reality is that there were people who did well and got out in time.

Excellent post. The Citi guy said the same thing - you've just got to keep dancing. We don't hear about the ones who got away - it's different at the very top, where they are in the public eye occasionally.

One thing to consider though is that didn't the banks in one year collectively lose more than they'd made in the previous 10 years or so? Yes, it's hard to be contrarian, but by God it pays off once in a while, like Taleb (and many others less vocal than he).

Edited by JustYield
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HOLA4420

OR they are looking two moves ahead and planting the "no one, including us, foresaw this" meme as the least bad option so they cannot be blamed for knowingly and cynically pumping the market.

Yup..... :rolleyes:

Just WATCH this little video -- it SAYS IT ALL -- And as I have said now for well over 5 years on this site -- it is ALL down to LIAR LOANS/Mortgage Fraud..... = THE ESSENCE OF THE WHOLE financial disaster....

Edited by eric pebble
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HOLA4421

Good found Eric; an astounding quote.

It overshadows the next excellent one though:

John Mack, head of Morgan Stanley, delivered a long lecture about how good his risk management was at Morgan Stanley, with stress-tests for all scenarios. But then when he was asked whether his bank had stress-tested for a fall in the housing market he admitted: "No, that was one we missed."

Yeah - I mean - just about everything this @rseholes said is beyond belief..... :rolleyes:

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HOLA4422

Lets face it, the investment banks were and are the fall guys of the governments who arein turn the fall guys for the senior civil servants that run your life. They were agents of credit expansion - funny money - as a means of enslavement.

Now their purpose has been served, they are being blamed for everything. And soon, they'll be gone. Even Dick Foulds bonus of $22bn for destroying Lehman looks tiny compared to the £30bn a month peak mortgage lending in this country. From that point of view, the investment banks were and are a good bet - cost effective credit expansion - creaming off just a few % profit from the top of the numbers they place on everyone's head.

Things will never change. On and on forever, bullying move after bullying move.

Edited by AvidFan
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HOLA4423

When you're answering to investors (i.e. a big chunk of the general public via direct investments and pensions) it is really hard to be a contrarian. People here have been calling HPC since 2003 probably - but if they'd have been running banks, they'd have been fired in 2004, 2005, 2006, 2007, 2008. They'd have been heroes in 2009, but they wouldn't be in the job by then. So these guys filled their boots, because everyone else was - it became normal. My thought is that if they are really worth what they are paid, they should have ridden the boom, then got the hell out before it crashed.

It was the same in the .com boom. I remember in 1998 thinking the world had gone mad - it had to fall apart, and I got to the point where I doubted my sanity on investments. Everyone else was getting rich, and I was still hunting yield. Felt pretty smug in 2000 - but the reality is that there were people who did well and got out in time.

]

I sold all my pace and information technology shares on the 17th jan 00 and waited for the storm............it came..

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HOLA4424

... we just missed that housing prices don't go up forever.

We can scoff - because house prices didn't go up forever... but that's an easy shot after the event. A priori it is far harder to reason why house prices couldn't go up forever. One way this could be achieved would be for government intervention to geometrically reduce the cost of secured borrowing each year - with a government guarantee to buy any home that's not bought on the open market and demolish it. This, subject to the government remaining in power, would - in principle, at least, keep house prices rising forever. The question isn't so much one of economics - but one of democracy and the determination of the ruling elite to impose an arbitrary economic model.

I spent a massive amount of effort trying to come up with a justification why house prices couldn't go up and up forever. Sure it seemed a barking mad assumption to make - but, for several years, it seemed as if the public believed it. Try, as I did, to rationalise why house prices had to fall - I failed. I believed they couldn't go up-and-up forever - but that was little more than faith in my view of mankind's behaviour... I'd nothing concrete. Sure, if prices always rose, we'd find ourselves in a remarkable political situation - but remarkable political situations are far from uncommon throughout history.

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HOLA4425

We can scoff - because house prices didn't go up forever... but that's an easy shot after the event.

An interesting angle Steve but what of, even, the single issue of the large scale acceptance of mortgage fraud that was hard-wired to explode? An insurance model works in the right circumstance but a wing-and-a-prayer ain't it.

I spent a massive amount of effort trying to come up with a justification why house prices couldn't go up and up forever. Sure it seemed a barking mad assumption to make - but, for several years, it seemed as if the public believed it.

Well, 'the public' seem to readily accept things that scientist-types question. In my pleading for a rational view on house valuations with various folk I was constantly reminded of that phrase 'Never argue with an idiot as they'll beat you while they wear you down with their experiences'

By the way, what's going on with the colossal # of comments on Pesto's blog? Are folk departing from here?

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