People don't think about the consequences of the consequences. People start by trying to hedge against interest rate changes, which is very difficult and complicated. Then, the hedges make the [reported profits] lumpy. So then they use new derivatives to smooth this. Well, now you've morphed into lying. This turns into a Mad Hatter's Tea Party. This happens to vast, sophisticated corporations

Somebody has to step in and say, "We're not going to do it-it's just too hard."

I think a good litmus test of the mental and moral quality at any large institution [with significant derivatives exposure] would be to ask them, "Do you really understand your derivatives book?" Anyone who says yes is either crazy or lying. In engineering, people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting. I'm more pessimistic about this than Warren. Derivatives are full of clauses that say if one party's credit gets downgraded, then it has to put up collateral. It's like margin-you can go broke [just putting up more margin]. In attempting to protect themselves, they've introduced instability. Nobody seems to recognize what a disaster of a system they've created. It's a demented system.

It's easy to see [the dangers] when you talk about [what happened with] the energy derivatives-they went kerflooey. When [the companies] reached for the assets that were on their books, the money wasn't there. When it comes to financial assets, we haven't had any such denouement, and the accounting hasn't changed, so the denouement is ahead of us.

Likelihood of a Derivatives Blowup

I hate with a passion GAAP [Generally Accepted Accounting Principles] as applied to derivatives and swaps. JP Morgan sold out to this type of accounting to front-end revenues. I think it's a disgrace.

"To say accounting for derivatives in America is a sewer is an insult sewage."

It [accounting for derivatives] is just disgusting. It is a sewer, and if I'm right, there will be hell to pay in due course. All of you will have to prepare to deal with a blowup of derivative books. It's bonkers, and the accountants sold out. Everyone caved, adopted loose [accounting] standards, and created exotic derivatives linked to theoretical models. As a result, all kinds of earnings, blessed by accountants, are not really being earned. When you reach for the money, it melts away. It was never there. We tried to sell Gen Re's derivatives operation and couldn't, so we started liquidating it. We had to take big markdowns. I would confidently predict that most of the derivative books of [this country's] major banks cannot be liquidated for anything like what they're carried on the books at. When the denouement will happen and how severe it will be, I don't know. But I fear the consequences could be fearsome. I think there are major problems, worse than in the energy field, and look at the destruction there.

I'll be amazed if we don't have some kind of significant [derivatives-related] blowup in the next five to ten years.

I think we're the only big corporation in America to be running off its derivative book. It's a crazy idea for people who are already rich-like Berkshire-to be in this business. It's a crazy business for big banks to be in.

Have you ever used the word "delightful" in a non-ironic fashion?

If you used the word "*HUGZ*" to offer what appears to be empathy to someone over the internet, given their experience with your personality -- would the recipient want to punch you in the face?

If someone were to offer you $15,000, would you agree to never partake in an intoxicating substance for the rest of your life? (if it happened of your own will, the money would be due back in full with 15% interest per year tacked on)

Presuming you like your dad, if someone tried to kill your dad, would you do everything in your power to return the favor?

Would you take a lump sum of five million dollars in exchange for becoming a passive consumer never able to contribute to society in any way, even creatively?

If you suddenly care about gymnastics once every 4 years...

Are you a jealous person, in terms of relationships?

Who is the most effective in-real-life troll?

I have a write-in troll candidate:

Only Males Answer: Do you care if a girl you may potentially date has the ability to hold down a job?

Only Females Answer: Do you care if a guy you may potentially date has the ability to hold down a job?

"I'm happy to tell you there is very little in this world that I believe in. Listening to the comedians who comment on political, social, and cultural issues, I notice most of their material reflects an underlying belief that somehow things were better once and that with just a little effort we could set them right again. They're looking for solutions, and rooting for particular results, and I think that necessarily limits the tone and substance of what they say. They're talented and funny people, but they're nothing more than cheerleaders attached to a specific, wished-for outcome.

I don't feel so confined. I frankly don't give a fuck how it all turns out in this country - or anywhere else, for that matter. I think the human game was up a long time ago (when the high priests and traders took over), and now we're just playing out the string. And that is, of course, precisely what I find so amusing: the slow circling of the drain by a once promising species, and the sappy, ever-more-desperate belief in this country that there is actually some sort of "American Dream," which has merely been misplaced.

The decay and disintegration of this culture is astonishingly amusing if you are emotionally detached from it. I have always viewed it from a safe distance, knowing I don't belong; it doesn't include me, and it never has. No matter how you care to define it, I do not identify with the local group. Planet, species, race, nation, state, religion, party, union, club, association, neighborhood, improvement committee; I have no interest in any of it. I love and treasure individuals as I meet them, I loathe and despise the groups they identify with and belong to.

So, if you read something in this book that sounds like advocacy of a particular political point of view, please reject the notion. My interest in "issues" is merely to point out how badly we're doing, not to suggest a way we might do better. Don't confuse me with those who cling to hope. I enjoy describing how things are, I have no interest in how they "ought to be." And I certainly have no interest in fixing them. I sincerely believe that if you think there's a solution, you're part of the problem. My motto: Fuck Hope.

P.S. Lest you wonder, personally, I am a joyful individual with a long, happy marriage and a close and loving family. My career has turned out better than I ever dreamed, and continues to expand. I am a personal optimist but skeptic about all else. What may sound to some like anger is really nothing more than sympathetic contempt. I view my species with a combination of wonder and pity, and I root for its destruction. And please don't confuse my point of view with cynicism; the real cynics are the ones who tell you everything's gonna be all right.

P.P.S. By the way, if, by chance, you folks do manage to straighten things out and make everything better, I still don't wish to be included."

-George Carlin

I'm a

Other habit of note:

Do I sound anything like you thought I might sound like before hearing my voice?