Wednesday, August 18, 2021

Self-cons and lies of obfuscation

Finally got around to reading the Big Short. (An actual physical-not-virtual book printed on paper, just like in the before times.) Lots to talk about here, but this section struck me as particularly relevant to some of our recent conversations.  

On one level, Lewis knows this isn't exactly true. Though the industry did its damnedest to confuse and conceal what was actually going on, the deception was never that effective. Despite all the repackaging and misdirection, the truth wasn't that hard to see, at least not for those who were interested in the truth.

The complexity of the instruments didn't lead the trader to deceive himself; they let him. While Burry and Eisman were extremely intelligent and diligent investors, but what really set them apart was, to steal one from Orwell, their willingness to see what was in front of their noses while almost everyone else refused to.

The meltdown of 2008 was perhaps the largest self-con ever with the financial sector losing something in the neighborhood of a quarter of a trillion dollars on the worthless securities it had created, but it was far from the first time a scam artist had bought his own spiel. 

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