One thing I admire about older people is when they continue to stretch their minds and learn new subjects into their later years. I hope that no matter what happens to me physically or otherwise that I can retain the curiosity that makes life interesting and inspires me to keep digging into new subjects.
One of the key elements of learning that I have been reflecting on of late is the ability to admit when you are wrong. As a somewhat arrogant “A-type” guy, I have never been one to accept defeat lightly – on way too many subjects.
However, this blog has been a place where I can not only spout my theories about the financial markets, which have unfortunately played out correctly for the most part, but they have also publicly highlighted my mistakes – leaving little room for backtracking.
Case in point was my blog post almost one year ago (August – 2007) praising IndyMac for its transparency as the credit crisis first began to worsen:
Although I did not explicitly state that the company would be OK at the time, I did complement the CEO and the company itself for being upfront with investors about how bad the situation was at the time – a time when CFC had yet to crack and few were acknowledging just how bad things were in the market.
The mistake I made was trusting transparency as enough for the continued viability of Indymac. I thought that the company would be able to make it through the difficult times by remaining open and honest with its investors.
Friday, the FDIC shut down Indymac in the second largest bank failure in history:
The depositors will get their funds, and the taxpayers (through the FDIC) will ensure that the repercussions of this failure will be as muted as possible.
However, when I look at the implications of this for the housing market and the continued challenges of our economy a darker picture emerges…one that begins to call into question my continued hopes for optimism echoed over the last few months here on this blog.
If the second largest mortgage originator is closed and Freddie and Fannie are barely viable (for those interested, Paulson today announced that the government may have to pour more funds into these entities to ensure their viability, discussed here:
Paulson Seeks Authority to Shore Up Fannie, Freddie) how is the housing market going to rebound?
Sure the Senate announced a $300B bill to help stem foreclosures, but this has yet to be jibed with the House version, and even then it is unclear Bush will sign it.
But what about going forward? All indications are suggesting that the innovation of securitization is dead if not on life support…and this means that the promise of a new paradigm of global liquidity may be gone with it.
A world with less capital floating around is less comfortable for all of us, as we are forced to start making choices again that perhaps we were able to refinance only two years ago. And homeowners can’t refinance or finance at all without a bank to lend to them.
With these dark clouds looming, I am nevertheless retaining a nuggest of optimism for the innnovations of social-media and green energy as two areas where tangible and exciting things continue to happen.
Whether in the announcement that:
or in the 3G Iphone global launch on Friday, exciting stuff continues to happen even as the clouds on the global economy continue to darken.
So I will continue to fuel the flames of my curiosity by exploring those two areas…and probably too many more.
And I will continue to look into the mirror and honestly admit my mistakes – as much as I can while keeping my head just high enough.