Glad I found your writing on this. I was astounded when in 1998 the Long-Term Capital Management group “needed” to be bailed out. I had studied the formula on which they built their business model—Blackwater-Shoals. And—yes—it didn’t seem so terrible at the time. But in the 2005(?) crash I heard that one of the majors in LTCF, John Meriwether, made a billion in the debacle — and I thought, oh, that’s what spectacular “failure” looks like at scale.” As far as I know, there have been no published studies on the efficacy of bailouts so the reason we keep doing it is probably nefarious.
Glad I found your writing on this. I was astounded when in 1998 the Long-Term Capital Management group “needed” to be bailed out. I had studied the formula on which they built their business model—Blackwater-Shoals. And—yes—it didn’t seem so terrible at the time. But in the 2005(?) crash I heard that one of the majors in LTCF, John Meriwether, made a billion in the debacle — and I thought, oh, that’s what spectacular “failure” looks like at scale.” As far as I know, there have been no published studies on the efficacy of bailouts so the reason we keep doing it is probably nefarious.
Fun reading: https://www.investmentexecutive.com/news/industry-news/meriwether-admits-mistakes-in-long-term-capital-debacle/
Thank you Burl, I followed Long-Term Capital Management back in the day, but haven't looked into it recently. Thanks for the article link.
This is all connected and it goes way back...