Lessons To Learn From The Financial Crisis

Jim Chanos, a graduate from Yale and a well-known short-seller, is famous for uncovering basic problems in a company that are mostly missed out by others. His alternate outlook in viewing a problem has helped many companies in solving their fundamental troubles in operation. Having worked with many organizations, Chanos terms his method of analyzing the problems as ‘cynic’. He famously unearthed problems with Enron at an early stage.

Recently, Chanos delivered a presentation on the top ten lessons to be learned from the prevailing financial crises. MarketFolly presents a summary of the talk given by Chanos at University of Virginia. This presentation was delivered by Chanos in an event hosted by the commerce and business schools in the university.

While the key points are crisp in the way Chanos does always, the thoughts are very much valid. Chanos points out the fault of the rating agencies in making debatable situations worse. Debates surely arise on this point, but no one can deny the fault of the rating agencies in escalating unwanted rumors.

The problem with quantitative easing is handled well by Chanos in his presentation. This point is much debated by investors and is one of the biggest lessons to be learned. Investors can never forget the impact due to quantitative easing in crisis situations.

Along with the lessons to learn from the financial crisis, Jim Chanos also points out the crack in the municipal bond market. He says, due to the benefits offered in the local and state levels, the problems could get worse when many approach retirement. He points out the cracks already in the municipal market which may get worse in near future.