Belatedly I am reading The Big Short by Michael Lewis. It is very well written and clearly lays out Wall Street's dirty tactics during the housing bubble, how they gamed the whole system, from regulators to rating agencies to their 'customers'. Particularly intriguing was the part about Goldman continuing to take collateral from a guy who had shorted housing bonds via CDS even though the market had clearly moved in his favour, simply because Goldman made the market in the instrument he was holding and therefore could say what they liked as to the value. This continued (and almost caused the guy into forced capitulation) until Goldman had figured out where the market was going and positioned itself on the same side of the trade as the smart guy. Then the big short was 'allowed' to get his rewards.

As I read it, the analogy to JPM share-holders became quite clear. I believe that we are collectively the Big Long, similar in a lot of ways to that Big Short. We're just waiting for things to blow up ('all hell to break loose' in Uncle Jimmy's words today), for the shysters that run the system to realize that our bet is the right bet, and then we will be off to the races.

Overdrive