

Charlie Munger on Greece, idiot bankers, accountants and more... - dchs
http://www.fool.co.uk/news/investing/2010/05/11/charlie-munger-on-just-about-everything.aspx

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gruseom
He defends Goldman and says this about JPMorgan:

 _But the world would be better off if JPMorgan didn't run a gambling casino
alongside a legitimate business. I take my hat off to Dimon, but I'd take away
his derivative book in a second._

Why is it a casino in JPMorgan's case, but not Goldman's? Is there a
difference between the two, other than that the speaker is invested in one and
not the other?

I ask because Buffett and Munger have a mammoth interest in this subject (I
was going to say "conflict of interest", but perhaps there's no conflict) and
in the public statements I've seen neither has even mentioned that, let alone
credibly addressed it. I find that disappointing. Like a lot of people, I've
long looked to them as examples of business leaders who care about good beyond
their personal profit and whose statements could therefore be trusted more
than usual. But everything they've said (that I've seen) about the financial
crisis is easily explained with reference to one principle, without Occam even
breaking a sweat.

~~~
misterbwong
I took his comments differently; it seems like he's talking more along the
lines of Glass-Steagall. I suspect that Munger doesn't have a problem with the
casino (trading firm) itself but the fact that it is running alongside a
traditional bank. The problem is, many people see JPM as a bank, not a trading
firm, and mistakenly treat is as a bank when, in fact, it's taking more risks
than a bank traditionally would.

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patrickgzill
Berkshire Hathaway has $9 billion or more in derivatives.
<http://www.nytimes.com/2010/04/30/business/30views.html>

Would have been interesting to ask how to determine whether "gambling" is
going on or not, given that Goldman, JP Morgan, and BH all have derivatives.

------
tome
Interesting that he says: "Goldman has the best morality of any of the big
banks".

Goldman have taken _a lot_ of flak recently. Perhaps it because they were the
survivor.

~~~
yummyfajitas
I think it's more than just surviving and coming out on top. They came out on
top because they have an extremely short term focus: buy stuff, package it,
flip it, move on. That's their business model and it allowed them to change
direction when the crisis it. In contrast, companies with a focus on long term
investments were crushed (e.g., WaMu).

This goes against the dogma that "those short sighted companies, aiming for
profits in the next quarter, now look at them." Therefore, Goldman must have
cheated.

~~~
tome
But Munger and Buffett are all about the long term. Why would they then admire
Goldman Sachs who you say are obsessed with short term?

~~~
cynicalkane
Munger and Buffett are long-term _investors_. They have nothing against short-
term positions, so long as those positions aren't confused with investments.

~~~
eru
Yes. They just do long-term investments in relatively simple businesses,
because that's what they do best.

------
eru
> When Hitler was in his bunker before he shot himself, he said, "This isn't
> my fault. The German people just don't appreciate me enough."

Charlie Munger knows his history. I wouldn't have expected a knowledgeable
quote about German history.

~~~
gruseom
It sounds rather like folklore to me, and I can't find the quote after a few
minutes of googling.

~~~
kn0thing
Aye, all reports indiciate the only one in the room with him before the
suicide was Braun and she didn't walk out of there either.

He certainly felt that way, but I don't think I've ever seen any evidence to
show that those were his final words. It's a great quote, though.

~~~
eru
Oh, the story with the bunker is a bit of a metaphor. Hitler ordered scorched
earth tactics at the end of the war, ostensibly because this should have made
it harder for the allies. But in his ideological point of view, this was
because he thought the Germans weren't worth it anymore.

See [http://www.br-online.de/wissen-
bildung/collegeradio/medien/g...](http://www.br-online.de/wissen-
bildung/collegeradio/medien/geschichte/nerobefehl/) and
<http://de.wikipedia.org/wiki/Nerobefehl> and
[http://www.lwl.org/westfaelische-
geschichte/portal/Internet/...](http://www.lwl.org/westfaelische-
geschichte/portal/Internet/finde/langDatensatz.php?urlID=602&url_tabelle=tab_websegmente)

Sorry, all of the sources are in German. (But that's German history for you.)

~~~
gruseom
Oh, I see, you meant knowledgeable about the general situation, not about what
Hitler said as such. I think you got downvoted (not by me, fwiw) for appearing
to take the quote literally.

As for the general situation, that's quite interesting. Shows how much Hitler
cared about the German people.

~~~
eru
There's also a direct quote somewhere from Hitler, where he says so outright.
It was written at the end of the war and meant to be kept secret. (Something
about how the `Slavic races have proved superior, and the Germans don't
deserve it anymore.')

------
oliveoil
earlier post about Munger this week on HN:
<http://news.ycombinator.com/item?id=1331591>

------
stretchwithme
just because someone can make money doesn't mean they know their history, are
unbiased, or understand the nature and cause of economic calamity.

------
mojuba
> _We were on the edge of something that could have taken civilization as we
> know it to the edge of ruin._

Banks alone can't take civilization down because they don't produce wealth. As
long as there are factories, services, knowledgeable, skilled people doing
useful things, the civilization will stand OK with or without the rotten
banking system.

Failing banks, on the other hand, might have taken down Berkshire Hathaway, I
suppose, but that's not the entire civilization.

> _Very high IQ people can be completely useless_

... in the eyes of very low IQ people.

> _I see no reason to think Goldman misbehaved in some horrible fashion.
> Everyone was doing it, and it's only natural to increase your moneymaking
> activities when you can do so legally._

Should I really comment on this nonsense? Goldman was doing what everyone was
doing without much thinking about the consequences, and they didn't misbehave?
Actually he responds to himself a bit later:

> _You have to be able to keep your head on when everyone else is losing
> theirs._

~~~
gvb
> Banks alone can't take civilization down because they don't produce wealth.
> As long as there are factories, services, knowledgeable, skilled people
> doing useful things, the civilization will stand OK with or without the
> rotten banking system.

While it is true, banks don't produce wealth, they are the lubrication that
keeps the machinery working smoothly. Manufacturing has to buy raw materials,
add value, and then sell their product. The time that lies between "buy" and
"sell" is tough without banks.

~~~
mojuba
What makes a bank a bank nowadays is money lending rather than deposits and
transfers. Some say money lending itself creates value, but I don't agree.
Oversimplified, it can be said that because money is nothing, then money
lending is even more so.

But in any case I was talking about the "rotten" banking system with corrupt
lending practices rather than about banking in general.

