I watched some abstracts of the Goldman testimony today regarding the money they made on some bets (and lost some too) and it was incredible, how these people don’t believe that the market would go down so low. I can’t believe since these investment bankers use sophisticated models and hire the smartest people around and still they say that they were surprised to see the housing market go under. Even the rating agencies have expressed surprise by how fast the market went down and they were caught off guard. I still can’t believe this thing since these investment bankers and the rating agencies hire the best and their recruitment process is so selective that only a few out of thousands of applicants to their firms get hired, the so called privileged.
Now if these smart people can’t see what is coming in the future with all their sophisticated statistical models and their insight to the financial markets than I don’t know who can see this? I can understand that the models and people who use them can be off the mark by some standard deviation from the average but this much off the mark that they get a big surprise then I guess I don’t buy this argument.
I am not super smart, but I know that if I am in the market daily and the financial sector is my bread and butter, I will be able to see the future with more accuracy than other normal folks and I would try to make my self or my firm get out of the market as soon as possible before the financial tsunami can drown me. It just boggles my mind to see that super smart people can claim their innocence even when they know that something will go wrong in the future.