Smackdown! Tavakoli Calls Lewis a GirlieMan

I mentioned earlier how much I liked the 60 Minutes piece with Michael Lewis.

Janet Tavakoli called foul this morning on Lewis assertions, pointing to a Bloomberg column he wrote in 2007, titled “Davos Is for Wimps, Ninnies, Pointless Skeptics.” Tavakoli specifically points to this paragraph:

“None of them seemed to understand that when you create a derivative you don’t add to the sum of total risk in the financial world; you merely create a means for redistributing that risk. They have no evidence that financial risk is being redistributed in ways we should all worry about.”

That statement, as of 2007, was simply wrong. Plenty of people were warning about this, and as his And, the column trashed variant perspectives warning about derivatives and an unhealthy credit market — Lewis, according to Tavakoli is guilty of precisely the sort of groupthink he criticized in both his book and on 60 Minutes.

I’m a big fan of Lewis’s work — I defended his book against some Amazon idiot reviewer trashing it only because the kindle version isn’t out yet — but back in2007, he got derivatives, Sarbox, and risk all wrong.

Score this one for Tavakoli . . .

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Sources:
Michael Lewis: Junior Salesgirlieman
Janet Tavakoli
Huff Po. March 15, 2010 06:26 AM
http://www.huffingtonpost.com/janet-tavakoli/michael-lewis-junior-sale_b_498781.html

Davos Is for Wimps, Ninnies, Pointless Skeptics
Michael Lewis
Bloomberg, January 30, 2007
http://www.bloomberg.com/apps/news?pid=20601039&sid=aaagOLYMd4yg&

Janet Tavakoli home page
http://www.tavakolistructuredfinance.com/

Michael Lewis Bloomberg Columns
http://www.bloomberg.com/news/commentary/lewis.html

Recent Books

Lewis:
The Big Short: Inside the Doomsday Machine

Moneyball: The Art of Winning an Unfair Game

Tavakoli:
Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street

Collateralized Debt Obligations and Structured Finance : New Developments in Cash and Synthetic Securitization