House of Cards
By Barry Ritholtz - February 12th, 2009, 7:58PM
David Faber’s reports are usually very good — I have the Tivo set to record this one tonite at midnite (its also on at 8pm, and I assume throughout the weekend). With a DVR, it probably clocks in at 75 minutes.
Here’s the official blurb:
CNBC presents the definitive report on the defining story of our time. CNBC correspondent David Faber investigates the origins of the global economic crisis, with first person accounts from home buyers, mortgage brokers, investment bankers and investors – most of whom let greed blind them, leading to the greatest financial collapse since the Great Depression.
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February 12th, 2009 at 8:37 pm
Also a great read….
How the Crash Will Reshape America
http://www.theatlantic.com/doc/200903/meltdown-geography
No place in the United States is likely to escape a long and deep recession. Nonetheless, as the crisis continues to spread outward from New York, through industrial centers like Detroit, and into the Sun Belt, it will undoubtedly settle much more heavily on some places than on others. Some cities and regions will eventually spring back stronger than before. Others may never come back at all. As the crisis deepens, it will permanently and profoundly alter the country’s economic landscape. I believe it marks the end of a chapter in American economic history, and indeed, the end of a whole way of life.
February 12th, 2009 at 9:23 pm
I find it hilarious that CNBC will air “the definitive report on the defining story of our time”. This is the same CNBC that did NOT report on “the defining story of our time” while it was going on. And it was their beat!
Serious chutzpah.
February 12th, 2009 at 9:33 pm
@E: As they say, “a day late and a dollar short”. Thanks for nuthin’, CNBC.
February 12th, 2009 at 9:46 pm
Very good report so far. Faber does usually have good reports. Much better than clowns like Gasparino who throw their idiotic opinion into every report.
The only thing we will learn after this crisis/deep recession is over with is how never to get into one of the same manner. When you burn your finger on the stove you may learn to never burn it that way again but you won’t necessarily learn to never burn your finger any other way. People have short memories and make no mistake about it, years down the road there will be another bubble. Bubbles have been going on since the 17th century. We learned to never purchase tulip bulbs at silly prices but not to never purchase internet stocks at silly prices. Things will eventually get back to “normal”, there will be young people in the business who weren’t in the business during this downturn. There will be “experts” explaining why this time is different. etc etc. This is not the end of the book. Its just a chapter coming to an end.
February 12th, 2009 at 9:52 pm
Am i just incompassionate or do others also laugh at the Large African American lady who feels cheated that moved from Compton into a 600k house and now is getting kicked out and thought she would be able to sell for $1 million or the Mexican imigrant and his family who got into a 550k townhown with nothing down. I am guessing both of them voted for change back in November.
February 12th, 2009 at 9:58 pm
The “greedy and blind” continue to flourish in Palo Alto. My Genius is rebuked.
February 12th, 2009 at 9:59 pm
I saw Faber prog on McDonald’s and it was very good. Guess I’ll have to set my old DVR to get it on the replay.
JohnDoe: “For it is the doom of men that they forget.” – Merlin in Excalibur But, the real problem is that men forget that they forget.
February 12th, 2009 at 11:03 pm
Show is worth watching…Faber managed to model every possible stereotype…the Mexican Immigrant, with zero financial accumen, who was duped…the brash African american who lived the dream for awhile…the geek who developed the CDO…the greedy Wall Street guy…the mortgage veteran who was shocked…the guy who foresaw the collapse and made a bundle. He even had Greenspan on the ropes in an interview, but let him off at the last minute with his dignity.
February 12th, 2009 at 11:21 pm
If Greenspans ignorance at the end of the show is not sign enough that we need the market to set interest rates and not let a few economists whom are easily persuaded set policy I do not know what was. It was particularly worrisome when Greenspan made the comment that he would have gotten too much heat from Congress had he tried to deflate the bubble because getting more people in housing was politcally correct. Is not the Fed supposed to be an independent agency and not influenced by politicians. This was a very scary statement by Easy Al in my opinion.
February 12th, 2009 at 11:26 pm
I watched most of it. There’s nothing new here for those who have followed the whole subprime mortgage/CDO/CDS scheme, but it was interesting to see some of the people involved…. the victims, the mortgage scheisters, and the fund manager who made a mint on CDS’s when the MBS’s collapsed.
Worth seeing (the DVR recording, at least).
February 12th, 2009 at 11:32 pm
Ventura2012 @ 11:21
“It was particularly worrisome when Greenspan made the comment that he would have gotten too much heat from Congress had he tried to deflate the bubble because getting more people in housing was politically correct”
Greenspan was correct in the sense that the political forces were very much against those who wanted to rein in the mortgage brokers, the rating agencies, the Wall Street CDO scheisters, etc. However, he could have, and should have made public statements about the dangers of failing to increase transparency. But then, the same could be said about others, such as Chuck Schumer, and Barney Frank (not to mention George Bush).
February 12th, 2009 at 11:37 pm
Ventura2012 Says:
Now, why don’t you heap some scorn on the superior, white, male, affluent mover-shaker who is now defaulting on his PRIME loan? Or the loan officer who took his commission and bonuses for how many “Large African American ladies” and/or “Mexican imigrant and his family who got into a 550k townhown with nothing down?”
As for change – here’s the biggest criminal of them all, and straight from the horses mouth:
“More and more people own their homes in America today. Two-thirds of all Americans own their homes, yet we have a problem here in America because few than half of the Hispanics and half the African Americans own the home. That’s a home ownership gap. It’s a — it’s a gap that we’ve got to work together to close for the good of our country, for the sake of a more hopeful future. We’ve got to work to knock down the barriers that have created a home ownership gap.
I set an ambitious goal. It’s one that I believe we can achieve. It’s a clear goal, that by the end of this decade we’ll increase the number of minority homeowners by at least 5.5 million families . . .
Home ownership is also an important part of our economic vitality. If — when we meet this project, this goal, according to our Secretary of Housing and Urban Development, we will have added an additional $256 billion to the economy by encouraging 5.5 million new home owners in America; the activity — the economic activity stimulated with the additional purchasers, the additional buyers, the additional demand will be upwards of $256 billion. And that’s important because it will help people find work.”
- George W. Bush, U.S. President, October 15, 2002 1:55 P.M.
Change is coming like a tsunami, and I have to say, I hope you’re out there collecting shells when it does.
February 13th, 2009 at 12:01 am
You want to understand the art of the con?
Watch the following film:
http://en.wikipedia.org/wiki/House_of_Games
February 13th, 2009 at 12:15 am
Why is anyone surprised?
I saw it happening, didn’t you? All of the above was brought to you by the same administration that brought you spying, torture, wannabe torture. leave it to the foreigner torture, and don’t forget the illegal immigrant torture, all for the sake of insecurity. They made Powell lie for them. they lied for fun, just because they could.
Never mind the violated Geneva conventions. I say free the Gitmo detainees, some people might be scared about what they will do, but then again that’s what old Abe wrestled with when he freed the slaves.
February 13th, 2009 at 12:56 am
I am interested to watch it. What intrigues me is the “official blurb” makes no mention of the role the Federal Reserve played in the entire fiasco. I wonder if the problems of the system in general will be mentioned in the report.
February 13th, 2009 at 2:46 am
The problem is much deeper than is presented here. It goes to the heart of the monetary system itself.
The US Constitution grants to the Congress the sole right to “coin money, regulate the value thereof, and of foreign coin”… . That provision is there for a reason. That reason is because the monetary system is how we keep score in the game of economics that we all play.
Economics is a game. It is not a science. It is an art. The way that we keep score in the game of economics is called money. That is why the founders placed in the hands of the Congress, the People’s House, the sole right of the money power of the land.
Two (four) notable authors have recently delivered themselves of works worthy of notice; they are: “The (Mis)behaviour of Markets, by Benoit Mandlebrot & Richard L. Hudson; and the forthcoming work by Robert Shiller and George Akerlof on behavioral economics . These two works describe most accurately how the world really works, at least in 2009.
But most of all, we need a means to keep score.
February 13th, 2009 at 5:35 am
Offtopic: The Economist has a very good article about Lincoln in its new issue.
http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=13108714
February 13th, 2009 at 6:16 am
Just have to chime in and object to the machismo use of the word greed (in the “official blurb”.) The more appropriate word is stupidity. As in the recent credit bubble (entirely voluntary and therefore avoidable) is a case of sawing off the branch you’re sitting on, and now we’re finding out the law of gravity still holds.
Too bad CNBC doesn’t have the balls to keep running out Bill Griffith like they did summer of 2006 for further editions of the “Housing Survival Guide”, which was a live show with industry experts and a studio audience. The same experts could give updates to their views of the prior year and credibility (or lack there of) rightfully awarded. C’mon, “I am CNBC” people…. where & why are you hiding????
February 13th, 2009 at 6:21 am
“Giant Pool of Money”on NPR was much more intelligent and evocative examination of the crisis and its origins than this CNBC paean to the lowest-common denominator. While Faber is better than the lot at CNBC, that is faint praise indeed.
February 13th, 2009 at 7:36 am
@Marcus
Change is coming alright my friend, change as in the worst market collapse in the history for the start of an adminstration. The market has spoken and my shorts have paid very handsomely. Maybe this change isnt so bad after all :)
February 13th, 2009 at 9:28 am
as an aside, that atlantic article is written by richard florida. being very familiar with his work (I was in grad school in his department when he was teaching at oh… 2 or 3 colleges ago, which for him is admittedly only 5 or 10 years), I can say his arguments are more by fiat and less by developing data and using it with integrity.
He is very charismatic though.
February 13th, 2009 at 9:32 am
Gasparino is presently engaged in a pissing match with Goldman Sachs over whether Goldman held a “secret” meeting to discuss Tim Geithner.
This was “BREAKING NEWS” at some point. Who cares? Precisely how is this meeting or non-meeting supposed to impact investment decisions?
This is what passes for journalism at CNBC and the situation is repeated at WSJ and elsewhere. Of course they all missed the tsunami. You are likely to miss the real story if you spend your time getting hammered on $30 cocktails at Elaine’s alongside all the people you’re supposed to be covering.
February 13th, 2009 at 9:48 am
Am I just “incompassionate” or does it tickle you all those white boys (bush et al) that got rich on this scam of theirs are going to go down as the biggest thugs in history. The white boys are being marginalized, hope they got their millions out of the country, because they aren’t welcome here. They don’t believe in the Constitution, they like wars, they are racists and they are getting their due. The damage they’ve done to this country is beyond belief. The pain of their acts is wide spread and will be here for years.
Gee, I’ve made lots of money on gold and shorting the stock market for a couple of years. Must be a real genius, after all you didn’t have to be smart to figure out the thieves were looting the treasury.
February 13th, 2009 at 10:10 am
Zillions of people saw it coming but that doesn’t translate into them making money off it. I have this vague memory of being brilliant enough to place bets on a housing bubble implosion in 2004-2005 and getting my ass handed to me. I’m sure everyone else around here caught the exact top but that wasn’t my experience.
February 13th, 2009 at 10:33 am
farmera1 Says:
February 13th, 2009 at 9:48 am
Am I just “incompassionate” or does it tickle you all those white boys (bush et al) that got rich on this scam of theirs are going to go down as the biggest thugs in history. The white boys are being marginalized, hope they got their millions out of the country, because they aren’t welcome here. They don’t believe in the Constitution, they like wars, they are racists and they are getting their due. The damage they’ve done to this country is beyond belief. The pain of their acts is wide spread and will be here for years.
Is it really necessary to bring this discussion into one of racism? What else do you expect of a nation that brought people from their homeland, against their will, to work for another man, without compensation? Our nation was founded on the hardwork of those who were underpaid and underappreciated. It just so happens that the Chinese won’t allow us to bring their underpaid and underappreciated back to the good ole USA. Instead, they will toil in slavery for pitiful wages and standard of living, but at least they return “home” at the end of every day.
Who will we take advantage of next, when the Chinese sweatshops have closed, as all changing and moderating societies eventually expose these working conditions? If there are people on Mars, they might build widgets for us to sell at Wal-Mart, provided they will work in “slavery”.
February 13th, 2009 at 11:02 am
A collage of deceit, fraud, naivete, hubris, denial, opportunity, skepticism, and timing. A very sad tale.
February 13th, 2009 at 12:48 pm
This decade so far has seen a particularly gruesome rise in the productivity-wage gap. Virtually all the benefits of the productivity growth – which has been substantial – has gone to the top 5% of earners. The gap will not be filled of it own volition. It will take dedicated policy. Until that trend is reversed, there can be no real, lasting recovery.
February 13th, 2009 at 2:52 pm
For those who can’t get enough of this stuff, PBS is having its own version of this story next week (on Frontline).
February 13th, 2009 at 3:47 pm
There is likely yet another monumental scam forming right now, silently, like the Real Estate debacle that was going on right under our noses for nearly 10 years.
February 15th, 2009 at 12:54 am
I thought the show was excellent.
I wish that David had spent some time on how leverage accelerated the bubble. I still don’t understand how these mortgage originators that were not banks got funded. Is that why the investment banks wanted more leverage?