Somebody posted that Buffett and Munger are selling the idea that - "The financial crisis was caused by over bullishness on real estate by EVERYBODY. Financial reform cannot prevent bubbles but can regulate over leverage." They also said" Envy is a bigger mischief than greed as the key contributor to the crisis".
That's a sad rationalization by multi-billionaires to blame the great recession on EVERYBODY. Sure, lots of middle- and working-class people made bad decisions with regard to credit, but make no mistake: the crisis was caused by the $1 trillion cash hoard of the Chinese and Saudis (mostly) looking for return in an environment where it had mostly drained out of the market. The Gang of 13 dreamed up the CDO market as a way to produce respectable and apparently sustainable return (HA!) and from there they were off to the races. A SMALL NUMBER of people were playing a high stakes game where anybody with any brains knew that when the music stopped, the thing was going to cave in. But it didn’t matter – the iBankers and market makers were pulling eight- and nine-figure bonuses and the Hedge funder were pulling 10-figure dividends. It was the natural order of things, right?
EXCEPT, we now have a business environment in which everyone is undercapitalized, the way they were making easy money in the aughts – when corporate profits grew at unprecedented rates – wasn’t because of return on assets, it was because of return on floating their cash flow! Now the F1000 looks like a bunch of zombie addicts who can’t get their fix. Look at John Hagel’s last work for the Edge Center with Deloitte. He’s no Marxist; he says the trend is that ROA for the F1000 is trending to 0 by 2020! What does that mean? It means that businesses were so hooked on making money with MONEY that they forgot how to make money exchanging valuable goods and services.