A GrumpyTechBro joint

Author's Note

If you are reading a crash and one side looks like the only villain, you are reading a campaign ad.

Savings and loans paid depositors a little and lent to families for thirty years. That mismatch is a duration gap: you borrowed money that can leave tomorrow, and you lent it for three decades. Paul Volcker at the Federal Reserve crushed inflation by raising rates, which also crushed that gap. Washington then let dying thrifts gamble with insured deposits because the insurance fund would pay if they lost. The Resolution Trust Corporation later sold the wreckage in public, slowly, and some people went to jail. We called that competence. A hedge fund in Greenwich, Connecticut took the lesson and built a mathematical bet. Fourteen banks closed that bet in a weekend, with no check from the Treasury. We called that private. Enron passed every audit. So did Crazy Eddie, an electronics chain that moved inventory at night ahead of the auditors. People committing financial crimes are accountants. Auditors are also accountants. Accountants know how to lie to other accountants. To catch a criminal you leave the office and drive to the address on the invoice. In 2002 a law made the CEO personally sign the books. We called accounting fixed. Then the mortgage factories took every lesson at once. The book was the country. It would not close.

The number you see is 2026 money. Hover the cart for a paycheck or an insurance cap, grocery money, CPI. Hover the bank for a hole in the system, the same slice of GDP. The original is underneath. The savings-and-loan cleanup is about $720 billion 🏦. TARP is about $1.5 trillion 🏦. It was huge at the time.

Hindsight is 20/20. There are no time machines in real life. This one is a gift. You find a victory point for getting off the train. History still rides.

Playing toward a boring bank is trivial from both chairs. It is hard from one. I do not let you play both. That is life.

Is that a slightly cynical view? I am Grumpy Tech Bro, not Happy Go Lucky Tech Bro. Deal with it.

The bell curve is a separate page. Practice beats theory.