Berkshire's Munger says investors should lower expectations.
"There will be a hell of a mess in these derivative books eventually," he said.Perhaps someone should remind Mr. Munger that a woman, namely JP Morgan's Blythe Masters, invented the Credit Default Swap.
Munger said better accounting standards are needed and banks should not be allowed to put money into risky and complicated investments.
"These people wouldn't get away with this horrible behavior if the accountants didn't bless it," he said.
Munger said the testosterone-driven, competitive executives heading most investment banks are partly to blame for the current financial problems.
"I do not think we'd have this mess if women were running all the financial institutions," he said.
Credit default swaps were invented with collateralised debt obligations in 1995 by Blythe Masters, a 34-year Cambridge graduate who was then the head of JP Morgan’s Global Credit Derivatives group.Ms. Masters, formerly CFO, is still on JP Morgan's executive committee and is now global head of commodities. Good timing.
I might also remind Mr. Munger of the crisis caused by a certain Helen of Troy.