Zerohedge points out what seems to be obvious to all but those whose professional interests lie in not being able to find their nose on their faces:

“Let’s get something straight right off the bat. We all know there is a certain level of fraud sleight of hand in the financial industry. I have called many banks insolvent in the past. Some have pooh-poohed these proclamations, while others have looked in wonder, saying “How the hell did he know that?”

• Is this the Breaking of the Bear? It wasn’t hard to see Bear Stearns collapsing 3 month before bankruptcy. Why didn’t our regulators see what I saw?
• As I see it, 32 commercial banks and thrifts may see the feces hit the fan blades It wasn’t hard to see that nearly all of these 32 banks would be facing the threat of insolvency. Why didn’t our regulators see what I saw?
• The Commercial Real Estate Crash Cometh, and I know who is leading the way! It wasn’t hard to see that commercial real estate was ready to implode and that GGP was about to collapse under its own weight. Why didn’t our regulators see what I saw?
• Yeah, Countrywide is pretty bad, but it ain’t the only one at the subprime party… Comparing Countrywide Countrywide and Washington Mutual’s collapse were visible AT LEAST a year in advance!
• The Next Shoe to Drop: Credit Default Swaps (CDS) and Counterparty Risk – Beware what lies beneath! ‘Nuff said…
• … and even Lehman Brothers: Is Lehman a Lying Lemming?

The list above is a small, relevant sampling of at least dozens of similar calls. Trust me, dear reader, what some may see as divine premonition is nothing of the sort. It is definitely not a sign of superior ability, insider info, or heavenly intellect. I would love to consider myself a hyper-intellectual, but alas, it just ain’t so and I’m not going to lie to you. The truth of the matter is I sniffed these incongruencies out because  2+2 never did equal 46, and it probably never will either. An objective look at each and every one of these situations shows that none of them added up. In each case, there was someone (or a lot of people) trying to get you to believe that 2=2=46.xxx. They justified it with theses that they alleged were too complicated for the average man to understand (and in business, if that is true, then it is probably just too complicated to work in the long run as well). They pronounced bold new eras, stating “This time is different”, “There is a new math” (as if there was something wrong with the old math), etc. and so on and associated bullshit.

So, the question remains, why is it that a lowly blogger and small time individual investor with a skeleton staff of analysts can uncover systemic risks, frauds and insolvencies at a level that it appears the SEC hasn’t even gleaned as of yet? Two words, “Regulatory Capture”. You see, and as I reluctantly admitted, it is not that I am so smart, it is that the regulator’s goals are not the same as mine. My efforts are designed to ferret out the truth for enlightenment, profit and gain. Regulators’ goals are to serve a myriad constituency that does not necessarily have the individual tax payer at the top of the heirachal pyramid. Before we go on, let me excerpt from a piece that I wrote on the topic at hand so we are all on the same page: How Regulatory Capture Turns Doo Doo Deadly….”

My Comment:

My only problem with this post is the argument that this whole charlatan’s game was plain to see for everyone. That suggests that the ordinary mom-and-pop investors ought to have known better. Ergo, they’re complicit too  (“You can’t fool an honest man,” etc. etc…).

Bunkum.

It takes a good bit of financial knowledge plus market history plus plenty of experience of the crooked workings of major market players plus some degree of outsider status (hard to rat on your customers and friends, right?) to call out things when it mattered. Calling out people in 2010 or 2008 is nice ‘n all, but it’s very different from doing it in 2006…or 2005…or 2002…or in come cases, the 1990s….which is when libertarians were doing their predicting.

Plus you need the type of moral character that instead of glorifying sharp practice shrinks from acting on such mean-spirited street wisdom as “never give a sucker an even break”… and “if you can’t kick a man when he’s down, when are you ever going to kick him”…..

But more on that in another post.