A few years ago, I was tormented by an aggressive broker who kept calling me at 6 AM to sell me stocks. I always hung up on him; but even when I was slamming down the phone, I could still hear him shouting his sales pitch. So I found this eerily amusing:
This technique is one of the last ones in the the Shafiroff book. Once an aggressive retail broker is upside down, the plea goes out for raising more money from the
markclient. “Believe me, I hate being under water more than you. I pulled in some favors, this is the trade that makes it all back for us and then some. I could even get in trouble telling you this, so don’t mention this to your pals. This is the one — but I need you to send in more capital so we can recoup the prior trades that went bad on us.”I guess Paulson read the book in the early days of his career. That line of bull***t is identical to what the public is now being fed. A series of OpEds in the Washington Post and the Wall Street Journal (and who knows where else) are all pushing the same nonsensical line: The bailout plan is a big money maker…
Financial markets are always complicated. Now they’re more complicated than ever. But the more complicated the world gets, the more you need to use your common-sense skepticism.
In other words, when someone asks you for $700B for reasons he can’t clearly explain, you hang up the phone.
READER COMMENTS
bt
Sep 30 2008 at 12:40pm
Bravo, well said.
Gary Rogers
Sep 30 2008 at 1:05pm
Amen!
Randy
Sep 30 2008 at 1:11pm
Hmmm… I wonder if there’s a way to report Paulson for spamming…
Methinks
Sep 30 2008 at 3:58pm
This is the same line of reasoning used by gamblers, which is why they end up in so much debt.
Amanda
Sep 30 2008 at 4:36pm
Thank you for this…last week the administration’s push to pass a bailout quickly reminded me of tactics I last heard used by a time share salesman.
aaron
Sep 30 2008 at 4:54pm
Yup. But if you need a more muddle reason why Paulson is wrong, here are my Best and Worse Case Scenarios. I think I might have Tyler beat.
The Drunken Priest
Sep 30 2008 at 5:00pm
Nice analogy. I also like the Paulson as Nigerian Banker thread going around…
donate furniture
Sep 30 2008 at 6:22pm
That is well put indeed! I cannot believe what is going on now. So now my guilt we be played on like kids not having access to college loans and therefore I should support the bailout. Outrageous!
AS
Sep 30 2008 at 7:19pm
First sale scene from Boiler Room
http://www.youtube.com/watch?v=TbIRedOqDwE&feature=related
Unit
Sep 30 2008 at 11:32pm
Bryan,
what do you think is the proportion of academic economists that oppose the bail-out?
Unit
Sep 30 2008 at 11:35pm
In other words, why don’t professional economists institute a computer program that records each one’s opinion on facts of the day and then posts anonymously on the internet this average expert opinion. That would be useful.
The Cupboard Is Bare
Oct 1 2008 at 7:46am
“… this is the trade that makes it all back for us and then some…”
This is the same line of reasoning used by gamblers, which is why they end up in so much debt.
Methinks
Oct 1 2008 at 8:16am
Paulson is raising capital for the largest distressed debt hedge fund – run by government. And he’s saying we’re all going to just die if he doesn’t get the money. Sounds like a boiler room operation to me.
Comments are closed.