Structured By Cows

26 Oct

Given that debating the finer points of credit-default swaps don’t exactly sell newspapers, every financial crisis needs an lingering image, a catchphrase that truly, for one and for all, emphasizes that human suffering was never a bug–it was a feature. In the case of Enron, very few people could actually explain what their business model was (actually, neither could they, which might have been the problem in the first place), but who could forget Grandma Millie?

Kevin: So the rumor’s true? They’re fuckin’ takin’ all the money back from you guys? All that money you guys stole from those poor grandmothers in California?
Bob: Yeah, Grandma Millie, man, but she’s the one who couldn’t figure out how to fuckin’ vote on the butterfly ballot.
Kevin: Yeah, now she wants her fuckin’ money back for all the power you’ve charged right up–jammed right up her ass for fuckin’ 250 dollars a megawatt hour.
Bob: You know, Grandma Millie, she’s the one Al Gore’s fighting for, you know?
–Excerpt from Enron trader tapes

Fortunately, by these terms, the current credit meltdown has finally truly arrived. Not since Sammy Sosa suddenly forgot English (and Mark McGwire forgot… everything) when quizzed about their steroid use has a Congressional hearing1 provided the opportunity for so much delicious delicious scheudenfraude. People–including all-around genius Jon Taplin–have spent much of their focus on Objectivist Alan Greenspan’s candid admission under oath that his entire guiding philosophy might have been wrong, but for those of us without the tolerance for Ayn Rand’s prose, the defining phrase came from an IM conversation between two bond raters at S&P that would up in the official transcript:

Rahul Dilip Shah: btw: that deal is ridiculous
Shannon Mooney: I know right … model def does not capture half of the risk
Rahul Dilip Shah: we should not be rating it
Shannon Mooney: we rate every deal
Shannon Mooney: it could be structured by cows and we would rate it

(Thanks to The Big Picture)

Of course, a close second goes to the less poetic (but more succinct) analyst who said “Let’s hope we are all wealthy and retired by the time this house of cards falters.”

1 Both overseen by Rep. Henry Waxman (D-Westside), no less.


2 Responses to “Structured By Cows”

  1. exponentialsmoothing October 26, 2008 at 12:46 am #

    I read that conversation between two bond raters at S&P in the WSJ the other day…ridiculous.


  1. Sound of Silver « Black Ships - November 11, 2008

    […] industry (Official Motto: “It’s Only Money”) is almost as bad. The recent furor over bond ratings has shown that not only were the raters performing faulty analysis, sometimes they weren’t […]

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