Before I left Atlanta in mid August I was fortunate to meet a young guy in his mid 30’s who is really sharp. He has a MBA and Law degree from Harvard. After a brief stint in Law he when to Goldman Sachs and worked a structured finance desk. That is the desk that does all of these derivatives and other funny bunny deals. After he left Goldman he went to JP Morgan where he also worked a structured finance area but had people under him.
After he left JP Morgan he bought the distributorship rights to some then obscure Rum that is now very popular. He sold the rights for about $30million a few years later.
So here is a super bright guy with more accomplishments in his short life then most would ever accomplish in 10 life times and he is telling me that his buddies on the trading desks at Goldman and JPMorgan are scared to death because the structured finance products they have pushed have no bid and are estimated to be worth maybe 10-20 cents on the dollar.
We are talking trillions of dollars of these products. He told me it was going to be the biggest disaster we have ever seen. He is planning on buying up debt after it implodes for around 10 cents on the dollar. The retail public is not privy to participating in it. He is doing through his contracts on Wall Street.
Its one thing to read, and hear these things from people on TV but to here it from a guy who REALLY knows was unnerving to stay the least.
Bernanke is not stupid. He knows what he did was wrong for the long term. The only conclusion I can make is there is something big and bad out there that no one really understands and Bernanke is afraid enough of the short term to do what he did.
It’s like watching a Hurricane come in off the Gulf.
