Right now, Michael Burry, the hedge fund manager who saw the housing crisis coming first, and former Fed chair Alan Greenspan, are in a bloody battle of wits.
Greenspan says Burry’s huge win was just a “statistical illusion,” Burry basically says Greenspan is just jealous and is just trying to avoid not explaining why he didn’t see the housing crisis coming.
Well. Greenspan read Burry’s op-ed this morning. He wants us all to know that it didn’t take him very long to read it or to formulate this argument, “Burry just had beginner’s luck,” on ABC news:
“There’s a group, a relatively small but not negligible group, who got it mostly by luck.
“Then there’s a very small group, most of whom are my friends, who got it right for the right reasons and who have done it time and time again.”
Ouch? Greenspan is obviously not talking about Burry, who is much younger than all of Greenspan’s friends and was pretty new to the game when he bet against the housing bubble.
Greenspan is also not explaining why all his “friends” didn’t tell him about the housing crisis. Instead, he just keeps taking digs at Burry:
“I don’t know Mr. Burry… I don’t know whether or not he is in that extremely small group which may, in fact, be really exceptionally adroit at these things. As I said, I know 4 or 5 people who are really good. I don’t know 6, 7, 8 or 9.”
What a sore loser! While he is damning Burry with his faint praise, Greenspan also picks apart his op-ed:
“The problem is, he, in that article, (which I read, quickly, this morning), is actually making the case that it’s a very small group because he says, effectively, that no one agreed with him.
“Well, he made his money (properly in the my judgment and, I think, very successfully) by effectively selling subprime mortgages short. Now, if everybody agreed with him… he wouldn’t have been able to sell those contracts… there would be nobody to buy them because they would agree with him. So it required a very large proportion of the investing public, sophisticated investing public, to disagree with him.”
So… what, Greenspan? Because Burry saw the financial crisis coming and you didn’t, he’s the idiot? Because now he’s shoving your “substantial intellect and unsurpassed knowledge of government” that missed the financial crisis in your face?
Sure, Burry is rubbing salt in open wounds (that will never heal because Greenspan is too old), but Greenspan is stooping down to his level and yet somehow still not admitting that he was wrong and that now he has regrets.
We think Greenspan should explain, like Burry asks him to in his op-ed, exactly how Greenspan and other officials missed the boat. (Burry actually says Greenspan should use his “substantial intellect and unsurpassed knowledge of government” to explain this. (Ha!) Because “if the mistakes were properly outlined, that might both inform Congress’s efforts to improve financial regulation and help keep future Fed chairmen from making the same errors again.”)
We also think Burry should return to the industry and try to prove to Greenspan that he’s not just a one hit wonder.
For more fun with financial foibles, check out this, The Idiot-Maker Rally Continues!
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