Our old friend Big Toe stopped by on a trek through the Southwest, and was on hand today to help us decorate the family Christmas tree. (That’s him hanging one of our rubber chicken ornaments.) It was great to see him.
Big Toe used to be Inkstain’s chief economist, but left a couple of years ago for a job at Lehman, and we haven’t really been in all that close touch, so it was fun to catch up.
While he was at Lehman, he worked in the group that developed mortgage-based credit default swaps. Big Toe always was something of a savant when it came to math but, funny story, apparently he’s the one who made some sort of mistake involving carrying the one or something – not sure about the precise details. I didn’t really follow, but apparently there was a big fuss about the CDS risk models, and Big Toe ended up on the outs with Bernanke. You would think that they’d be more forgiving about a little arithmetic error, but whatever. Big Toe was short selling Bear Stearns, so he landed on his feet.