I often use a quote from Michael Lewis, author of the “The Big Short” (soon to be a major motion picture), on the subprime collapse that led to the Global Financial Crisis of 2008:
These people (on Wall Street) believed that the collapse of the subprime mortgage market was unlikely precisely because it would be such a catastrophe. Nothing so terrible could ever actually happen.
Once a risk-taker has ruled out the possibility of system failure, then, logically, it’s possible if not imperative to double-down on your bet. If something truly awful can’t happen because it would be so truly awful, then you can make lots of money by betting that the truly awful won’t happen. That is basically what Credit Default Swaps were all about. Didn’t work out so well for AIG. Or us.
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Lewis’s latest book is “Flash Boys” (should be a major motion picture, lots of Canadian content). And here’s the quote I’ll be using from it:
Once very smart people are paid huge sums of money to exploit the flaws in the financial system, they have the spectacularly destructive incentive to screw it up further, or to remain silent as they watch it being screwed up by others.
That, I think, analogously explains much of the carbon business and related endeavours like motordom. Or to adapt the Lewis quote:
Once very smart people are paid huge sums of money to exploit the environment, they have the spectacularly destructive incentive to exploit it further, or to remain silent as they watch it being screwed up by others.
Swiss Franc anyone, who saw that one coming? Oil down 60% in 6 months, who saw that coming? Russian millionaires frantically breaking leases and scrambling out of deals in New York and Miami, who saw that coming? CTV News Vancouver poll two days ago: 66% of respondents say Vancouver real estate will NEVER go down from current levels.
“Once a risk-taker has ruled out the possibility of system failure, then, logically, it’s possible if not imperative to double-down on your bet.”