It's not a stretch to say the whole financial industry revolves around the compass point of the absolutely safe AAA rating. But the financial crisis happened because AAA ratings stopped being something that had to be earned and turned into something that could be paid for.
Interpretation
AAA ratings should signify earned trust, but they became compromised due to corruption within the financial industry.
Matt Taibbi critiques the financial industry, highlighting how the integrity of AAA ratings deteriorated over time. Instead of being based on actual financial stability and trustworthiness, these ratings became accessible through monetary means, leading to false security and ultimately contributing to the financial crisis. This quote serves as a reminder of the importance of maintaining ethical standards in finance and the dangers of prioritizing profit over integrity.
In practice
This quote could be used in a financial seminar discussing the importance of trust and integrity in ratings.
You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again.
Wall Street has turned the economy into a giant asset-stripping scheme, one whose purpose is to suck the last bits of meat from the carcass of the middle class.
'Nobody goes to jail.' This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth - and nobody went to jail.
By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future.
The problem that people don't understand is that active managers, almost by definition, have to be poorly diversified. Otherwise, they're not really active. They have to make bets. What that means is there's a huge dispersion of outcomes that are totally consistent with just chance. There's no skill involved it. It's just good luck or bad luck.
Bad debt is sacrificing your future day needs for your present day desires.
The only thing useful banks have invented in 20 years is the ATM.
When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.
Credit is a system whereby a person who can not pay gets another person who can not pay to guarantee that he can pay.
When you sell options, you get paid for assuming risk. That can be a profitable business, but it does not mix well with the risks inherent in a leveraged portfolio.
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