UCLA Econ Dept Commencement address by Michael Burry

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sand_puppy's picture
sand_puppy
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UCLA Econ Dept Commencement address by Michael Burry

I was introduced to Michael Burry in "The Big Short."  He is an economist, who became a physician and then a neurologist, I believe.  He utterly brilliant and made a fortune by understanding the sub-prime melt down several years before it happened. (He ran a private fund that invested 100 million for a return of some 5+ billion in shorting sub-prime mortgage backed securities.)  He is right up there with Kyle Bass in my assessment of the stunningly brilliant, out-side-the-box thinkers.  I hope you enjoy this.

http://www.youtube.com/watch?feature=player_embedded&v=1CLhqjOzoyE

RJE's picture
RJE
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Joined: Aug 31 2008
Posts: 1369
Sand-Puppy you are correct

Sand-Puppy you are correct Sir, he is brilliant and not because of the cash he made but because he speaks the truth as you have rightfully acknowledge. Thank you, truth is sorely lacking these days.

Regards

BOB

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gillbilly
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Brilliance or courage?

I enjoyed the speech as well, but in my humble opinion, brilliance isn't what I heard. I think what is impressive is the courage he had to act, and in this video speak, on what others who were in the financial sector would not and still will not. It's another reason we can admire Chris! I guess I take it back, there is brilliance in great courage.

I find it interesting that the message that still continues is that no one saw the meltdown coming in 2008. Even I (and I don't consider myself brilliant at all!) predicted back in 2000 after the stock market bubble burst that there was going to be another huge market downturn and that it would happen in the real estate market, which in turn would bring down all markets. I predicted it would come somewhere between 2010 -12 (oops, a little off). There were many that saw the writing on the wall, but most of these voices were considered anecdotal  or dismissed. I also think those in power could see the storm brewing...at the time my take on Bush's attempt to privatize social security was really just an attempt to prop up the buy side of the equities market. Taking into consideration the demographics and wealth distribution of the baby boomers and the fact that ERISA forces retirees to divest after age 70, it seemed pretty clear to me that there was not enough of us coming up behind them to effectively buoy the market. I thought It was relatively easy to see the leverage move from equities to real estate. I did not have my eye on the CDS and CDO markets since these markets were not open to the individual investor, but rather dominated by institutions. I commend him for admitting that his "overnight" success was ironic since shorting these extremely leveraged positions required leverage.

I think many people intuitively felt and saw what was going on, but it takes tremendous courage to take a short position of that magnitude. I personally never had the stomach for shorting. To me, the short squeezing and pumping/dumping of stocks are just two of the fundamental  issues wrong with the markets, not to mention the leveraging beyond acceptable risk levels. Unfortunately, I see all these things now as integral to the global economy and why I am here at this site learning from all of you.

I watched a documentary on the meltdown not too long ago (I can't remember the name now), and what was really interesting to me was that when they interviewed those who worked in the CDO market and asked them why they didn't speak out at the time, the response was... "I felt I was just a cog in the wheel." These were people making millions...cogs in the wheel!

I think this gets to the heart of it. My own experience confirms this. From 05 - 08 I was elected to be our town's head assessor (thankless job, but eye opening). Our town was a mess in regard to tax allocation. Naively, I thought I could walk in and clean up the mess... actually in the end I did a pretty good job of making things a little fairer. But what I learned was that so much of the "system" of government is in control of what politicians can and can't do and not the other way around. The people I met in government were not greedy power hungry people, but people who worked hard and long hours to try and make a difference. The predicament was/is that there are so many laws that have been passed in the interest of so many constituents that it makes it very difficult to get anything done. This predicament is in both our governmental and financial institutions and manifests itself in those that work in them feeling as if they are merely cogs in the wheel. I know I did. This is yet another predicament that fits into Chris's 3E predicament.  If we are expanding exponentially in all areas of life, government inevitably has to grow as well to make decisions as to how to regulate this growth. I know, there are some of you out there yelling NO, bigger government is not the answer. I'm not disagreeing, but I'm not agreeing either (hence the predicament). With every new innovation in science, health, economics, etc. the government is the only institution big enough to be a check on private growth. We need a government that will hire people to weigh in on the newest innovation to see if it is safe and in the best interest of the public. That requires more money and often more laws. But with more money unfortunately comes more corruption (which speeds things along), and so the cycle continues until it inevitably collapses or dramatically changes. Stay tuned...

Thank you

Oliveoilguy's picture
Oliveoilguy
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Joined: Jun 29 2012
Posts: 351
Thanks Sand_Puppy

Truly Inspirational. Hope everyone at Peak Prosperity takes the time to watch the link you posted.

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