Quite reading list for this holiday. The stories rhyme in how AIG/FNM/I-banks all started as trusted, highly rated entities. First they used their privileged AAA rating to earn spread over riskier assets. When that hit its limits, they moved to higher leverage to increase returns. Then to mismatched duration. Then to untested products,until it all finally came to grief.

The puzzle to me is why this generation of managers so aggressively monetized the goodwill their predecessors worked to build. It feels like a form of asset-stripping and I read it in every story of failure now washing to the surface. Why was the instinct to to consume it all today and leave nothing for future generations so consistently strong across these firms? What kind of legacy are you leaving behind? What sort of world do you think you’ll be living in afterward?

Thank you again for your efforts in 2008. And remember that with loss usually comes wisdom and that’s a treasure in its own right.

Your insights have helped me a great deal, keep up the great work. I value your blog above all others. And don’t forget that each of is responsible for his investment decisions, so don’t blame yourself. I eagerly anticipate your future writings. Thanks again for you have done for me.

If you’re taking responsibility for your errors, I’ll take the other side of that trade and, rather than trying to place blame, I’ll thank you for the gifts you’ve given us. I’m fairly new to trading and investing, and your site has helped me to understand the macro picture and be prepared. Fortunately, I managed to turn a profit on my personal portfolio this year, and your insight has helped me to accomplish this. From your thoughtful posts to your excellent book suggestions, you have helped this young investor navigate these troubled waters. For that I thank you. Please keep up the great work!

I think you underestimate the role of the GSE’s in fomenting this crisis. The mortgage banking industry went wild with under 417k+ 1st loans. All of my m-banker friends would print these all day to basically anyone, and they had an easy time fitting them into the underwriting criteria. I don’t think the GSE’s did any diligence on that. Also, even if the GSE’s weren’t 100% of the market, they were still big enough to affect it. If they weren’t there the other participants could have charged more for the risk that they took.