"Basically, It's Over" by Charlie Munger | Hacker News Reader

"Basically, It's Over" by Charlie Munger

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132 pointsdavid92795 comments

From http://seekingalpha.com/article/97158-goldman-sachs-buffett-... :

"In the news yesterday, Goldman Sachs (GS) announced that Berkshire Hathaway (BRK.A), Buffett's investing vehicle, will purchase $5B worth of perpetual preferred shares with a 10% dividend being paid in return for exclusive use of this capital injection. Not only does Berkshire get a dividend nearly double that of Canadian bank issued perpetuals, but the holding company also receives warrants to purchase $5B of common stock at $115 during the next five years."

So let's put it together.

* Buffett and Munger buy tons of stock in the above mentioned "casino".

* The casino loses big.

* Casino gets huge tax bucks from you and me to cover its loses and pay huge bonuses to itself.

* The tax money flows back to Berkshire via the holdings listed above, and form thence to Buffett and Munger.

* Munger writes folksy article damning "casino gambling".

For those who weren't aware, Buffett was a director of Goldman for many years. You know, the years when all this latest crap was happening. The years when he and Munger must have talked at least once a week. Those years.

EDIT: Buffett is the largest individual investor in GS, and was apparently asked (on that basis) to join the board, but apparently never did. My bad. On the other hand, his involvement in TARP is even worse that I knew:

From http://www.mcclatchydc.com/2009/04/05/65496/buffett-champion... :

"Buffett's company, Berkshire Hathaway, hasn't received any of that federal aid, but Berkshire, based in Omaha, Neb., owns stock valued at more than $13 billion in the top recipients of TARP funds, including Goldman Sachs Group, US Bancorp, American Express and Bank of America, which analysts all thought were in deep trouble before TARP was approved in October."

I'm a huge believer in economic freedom, i.e., the free market. I only wish that most large businesses were. It's so much easier for them to rent-seek.

You can disagree with the scheme of things while exploiting it. Buffet thinks his taxes are too low but he doesn't offer to pay extra unless he is forced to.

I think it's hard to criticize the man on those grounds since he has pledged to give the "bulk of his fortune" to the Gates Foundation. That's arguably more productive than donating money to the government.

http://www.washingtonpost.com/wp-dyn/content/article/2006/06...

I was disagreeing with the original commenter.

I was arguing it's possible to not agree with the way the world works, but still exploit it. Of course buffet shouldn't pay taxes until the laws are changed. Hs's publicly argued many times that taxes are too low on rich people, just as he argues derivatibes are net destructive to society - it desn't mean he should not deal in derivatives if he sees an opportunity.

Wouldn't voluntarily paying extra taxes be akin to donating money to the government? Say what you will about Buffet, but I don't think you can criticize him for not writing a few extra zeros on his tax check.

EDIT: Fixed duplicate words.

Sure you can.

Also, Buffet advocates higher taxes that the won't pay and that he benefits from.

Consider the estate tax. He pushes it, but his estate will never be taxed. He also makes quite a bit of money selling insurance to help people pay estate taxes.

Yes, he benefits directly from estate taxes.

Why will his estate not be taxed? Because he's going to give most of it away before he dies? That makes him some kind of tax cheat?

The estate tax doesn't even kick in unless the inheritance is over something like 2 million dollars. That is one "anti tax" issue that I seriously don't understand. Seems like that should be literally the last tax that gets cut, why not cut the income tax if we're cutting taxes?

Family farms and small businesses are often severely hurt by estate taxes. Many of the people who oppose the estate tax are those who want to see a farm or business stay in the family, but tax laws make it incredibly hard to transfer it to their children.

It is often portrayed as something only the super wealthy need to worry about, but plenty of farmland goes on sale in the midwest because taxes can't be covered.

Well, advocate for an exemption, then. Advocating to abolish the tax entirely come across as advocating for only the super wealthy's needs -- let's face it, family farms and small businesses with values over 2 million are a tiny minority of these inheritances, nationwide.

You're missing the point. The estates of the super wealthy aren't subject to the inheritance tax. It only hits family biz because they can't make the necessary arrangements.

marshallp wasn't criticizing him. On the contrary, he was just pointing out that Buffet's actions are morally consistent.

I'll bet it's not part Goldman's normal business model to borrow money at 10% to fund operations. Perhaps Buffett was just taking advantage of their weakness to extract some cash from the beast and invest it into more sound vehicles in the future.

All absolutely true, but note the lack of derivatives and hedges. The Goldman transaction was a straight equity deal, with a big emphasis on dividends. In a nutshell, it was a chance to squeeze one of the 'casinos' hard, while still staying out of the whole CDO/default swap/derivative mess.

Both Munger and Buffett have a habit of stealing your wallet while telling you you're an idiot for letting them do it. The article and the Goldman deal are reflections of that attitude.

"The Goldman transaction was a straight equity deal, with a big emphasis on dividends."

No. They were derivatives. Goldman was to pay those heavy dividends by executing credit default swaps they had purchased from AIG. Trouble is, the securities underlying the swaps were overcommitted, meaning the swap prices would be driven way down in an open market. And Goldman didn't own the securities. And the securities hadn't necessarily defaulted. And AIG had no money.

This was solved by the Munger/Buffet helping arrange for the taxpayer to pay off AIG's gambles at 100% without Goldman even delivering the securities underlying the swaps.

Make no mistake, the Goldman deal was a naked derivative play combined with brazen government corruption.

There's no question that Goldman had to pay off those dividends with some kind of shenanigans. IIRC, they were up to their eyeballs in default swaps and CDOs, both of which were beyond toxic at the time. That 10% payout was going to have to come from somewhere.

However, my understanding was that from Berkshire's perspective, it was a straight equity investment for preferred stock. They didn't really care where the dividend cash came from, so long as they got paid. So, if it was a derivative play, it was an indirect one. Berkshire never had those default swaps on its books.

That's how I remember it going down, at least. It's entirely possible that I got some of this wrong.

The Berkshire and Goldman deal was, but Goldman plays in derivatives. Where are the fundamentals there? Or when is Goldman going to announce their new business model?

You'd hope someone like Buffet, with his cache and savvy could suggest some reasonable ways to end "too big to fail." All things right now make me think we'll have another bust in a couple years, nothing is fundamentally different.

You cannot avoid playing in derivatives. Do you have a bank account? Do you own U.S. currency? Is all of your wealth in gold? In any of these cases the price is set by the market and strongly effected by derivative trades. You need to understand derivatives just to do a reasonable job avoiding them.

Warrants are derivatives.

Actually depending upon how the warrant is structured it's most likely a pseudo-derivative, not a pure play on pricing action.

If you classify options as derivatives, then you're right. However, if you use that definition then the Berkshire/Goldman warrants are the simplest derivative that I've ever seen.

The Goldman warrants are an option to purchase an additional $5 billion of stock at $115 per share, any time in the next 5 (now 4) years. Basically, they're a plain vanilla call option.

What's really interesting about those warrants is that they behave identically to an equity purchase, only without the downside. Berkshire literally can't lose money. Plus, if the warrants are ever exercised, then Berkshire simply gets more equity. It never gets tarted up with default swaps and tranches and triggers and all that crap. The deal is the complete opposite of the 'casino' mentality that Munger is decrying.

So, yeah, you might be technically correct. However, you've also got to look at the spirit of the thing.

Buffet was never a director at Goldman. Berkshire did not loan the $5 billion and receive the options until well after the financial mess, after Goldman's stock dropped over 50%. The article talks about casinos dealing "financial derivatives" which are completely different from equity securities, and which were the primary investment vehicle that led to the collapse in 2008. Munger is dead on.

Buffet was never a director at Goldman.

Thanks for the catch. See my edit above for more.

Berkshire did not loan the $5 billion and receive the options until well after the financial mess...

This is effectively wrong, since the TARP funds were issued after the investment. See the link at the edit above.

Sure they were, but he didn't make the loan until well after everything collapsed. In fact the U.S. Treasury was practically begging for him to make these investments and he said he would only do a deal with Goldman because he knew they were the only bank left that was financially sound. EDIT: And Wells Fargo. He bought into Wells Fargo huge.

In any case, I think that if there anyone who has demonstrated an immense understanding of the American economy for the last 50 years, it's Warren Buffet and his partner Charlie Munger. There is no one/duo that has been more successful at investing and predicting long term economic scenarios over this time period.

Yeah, given that he stayed out until things collapsed, then swooped in and bought at the bottom, I think it's pretty hard to tag him with "involved in the collapse".

It's also worth noting that Buffett occasionally likes to take a turn at being the house. Between 2005 and 2008, he sold a notional $40 billion of puts on various equity indexes. This is basically a highly leveraged bet that the market would go up 5% a year for the next 15-20 years, entered into at the height of a bull market.

It also backfired on him at the height of the credit crunch. While he was smart enough to write the contracts in such a way that he didn't need to post collateral, he didn't account for the way that someone looking to hedge their counterparty risk with him would behave. When the market collapsed, the buyers of the puts proceeded to short both the equity and debt of Berkshire to protect their investment. http://crookery.blogspot.com/2008/11/valuing-large-options-i... and http://crookery.blogspot.com/2008/05/warren-buffetts-vega-ga... have some of the technical details, and http://www.portfolio.com/views/blogs/market-movers/2008/11/2... has a good general explanation of what went wrong.

Buffett may not have been in the casino all the time, but he had plenty of side bets that could have wiped him out.

BH could have paid 40 billion today let alone in 10+ years from now so it's not highly leveraged. Highly leveraged for BH would have been placing a 4,000+ billion bet. If you read up on this deal BH maximum risk is a small fraction of their projected net worth and they can’t be forced to pay up early. They would need to lose ~90% of their value today and never recover for this to be an issue. At the same time to be on the hook for the full 40 billion the indexes would need to be at zero (at which point the company would have already failed).

PS: Leverage means making money from money you don't have ex: loan on rental property. But to classify as highly leveraged you need to risk 10x or more money than you actually have.

Buffett has been more prudent than much of the rest of the financial industry, and he should be commended for that. However, the primary business for Berkshire Hathaway is reinsurance. As such, other insurers pay them to take on the risk that claims will exceed a certain level. If New York got nuked, the reinsurance contracts that Berkshire has written with the property and casualty insurers of the area would be invoked and Berkshire would be forced to assume the bulk of their obligations.

The "money you don't have" part of the definition of leverage isn't necessarily money that you must pay back like a loan or bonds; it can also be money that you may have to pay under certain conditions. Writing naked puts and selling reinsurance is the latter.

From http://community.reinsurance.org/Data/Leverage/Und%20Lvg%202... , we can see that Berkshire's 2005 leverage ratio was 143%. That's fairly low for a reinsurance company, and Berkshire is not highly leveraged.

However, I'm still going to maintain that the marginal increase in leverage from the specific derivatives deal I mentioned was rather high. Most insurance companies have noncyclical liabilities (e.g. the mortality rate doesn't increase in recessions) and procyclical assets(e.g. stocks and bonds that fall in recessions). The sale of puts added a procyclical liability, increasing Berkshire's leverage at the margin.

I don't like casinos much either, but I wouldn't mind owning one. The preferred shares in a profitable company shows the usual skilled negotiating that Buffet uses to get large pieces of large companies in deals with a high margin of safety. Here, he gets a solid dividend on his investment with the possibility of upside. The problem that Berkshire Hathaway have is size : they are running out of profitable places to invest $5 billion dollars. Their primary responsibility is to invest well for their shareholders, so that's what they are doing.

The parable is designed to highlight the folly of having 25% of your GDP devoted to what is essentially gambling. I don't think the story is weakened by the author having invested money in one of the 'casinos'.

From what I have read, investing in Goldman was Buffet's idea. Are the any articles that list Munger talking about the equity stake in goldman as well?

Munger is clearly advocating for "the Volker Rule" and a middle of the road economic policy when it comes to regulation (It's hard not to agree).

The finger pointing at Bershire here from self-proclaimed free market advocates is bunk. In theory, we all benefited indirectly from TARP, they just had enough foresight to position themselves to take advantage of the opportunities presented by the turmoil.

It would also be nice to clearly differentiate Bucket Shops and Over-the-Counter Trades. The concepts are very similar, but only one is legal. Anyone have a good explanation?

P.S. The article is a good parable, but switching from the casino metaphor to talk of actual casinos threw me for a loop.

P.P.S. Most everything is a derivative. The problem is with counter-party risk and transparency. Derivatives are not inherently bad.

One of my discomforts with almost all economic arguments is the strong partitioning of ideas. If you are free market, the government can do no good and if you are "Progressive" corporations are evil. Munger is mostly above this level of naivete, but not completely. He points out that government spending is too high and that leverage can be too dangerous (i.e. gambling.) However, he seems to be prescriptively mute on the former and favors prohibition on the later.

The school of thought to which I am a recent entrant suggests a more uncommonly (expressed) alternative. Keep all the gov debt and spending as low as possible when times are good. Regulate to a minimum. When a crisis occurs, the government should sometimes step in to stabilize a violently turbulent system. (Sounds like Keynes, no?)

However, you don't bailout a company. That ruins the fabric on which capitalism is built. The losers loose their money. An option is a derivative; not all derivatives are options. Bailouts make all derivative speculation, speculation in cheap options. Don't ban derivatives. Ban bailouts.

You can be progressive and free-market if you believe corporations tend to be are anti-free-market. Which they often are.

"If you are free market, the government can do no good."

Absolutely false, and I bet you can't name one scholar from Hoover who agrees with you.

Ok, how about this phrasing,

"If you're a scholar from Hoover, you'll write dozens of articles a year castigating government involvement in the marketplace as a general idea, while never, ever, once writing anything that praises government action [unless maybe if it was government action by a republican]"

If that's actually true, you could have provided examples.

Feel free to tell us how many such articles you've read. No, reading articles about such articles doesn't count.

So what's going on with bank reform, anyway? I haven't really kept up. I distinctly recall Bernanke saying, "too big to fail has got to go" around the time of the bailouts. Yet I haven't heard much about progress on that front...

Good question. Since the Government bailed out the banks that were too big to fail they have midwifed the merger of a couple of those banks so the banks that were too big to fail are now even bigger.

And then they made enough money to pay the government back.

Yes, government backed trusts can make lots of money - see: railroads and phone system.

That does not mean that is the best state of affairs for most other businesses. I am pro free-market competition, but the trouble is most big businesses are not.

Do you seriously think it would have been a good idea to have exactly one phone company in the US during the dot com boom? Can you imagine how long it would have taken to get a T1 provisioned from Ma Bell? Instead because the government sued AT&T and broke them into 7 smaller companies and forced them to open the CO to competitors we had many companies to choose from.

I say companies should be able to do whatever they want as long as they are small enough to fail - i.e. I am not on the hook for paying off their bad bets

Proof by fiction is even worse than proof by anecdote.

It's not "proof by fiction" but a parable. He and Warren have always traded based on fundamentals, and he's saying the fundamentals got lost along the way. It's a fair point.

As a completely uninformed person, can I ask whom "the good father" in the parable refers to?

I have to say that while parables can be very powerful, this one only so thinly veils reality, that it confuses more than it helps.

I guess it's an amalgamation between Benjamin Franklin, Lee Kwan Yew.. and I can't recognize the third (Google suggests Paul Volcker)

Aha - thanks! The good father indeed sounds like Volcker: http://economix.blogs.nytimes.com/2009/12/17/paul-volcker-fi...

I wouldn't dismiss this piece out of hand. As co-captain of Berkshire Hathaway, Charlie Munger's got a pretty good window into the global financial system. Both he and Buffett have a pretty folksy manner, but behind the goofiness is usually some razor-sharp analysis.

To make it more palatable, substitute 'United States' for 'Basicland', and 'investment banks' for 'casinos'. Then it becomes a pretty accurate picture of our current situation.

I got the analogy, and the story may or may not be accurate. I have heard the name Charlie Munger before, but I don't know what he stands for. I just don't like the general approach of convincing readers with fiction. It appeals to the subconscious rather than logic. I prefer logic in such matters.

"Artists use lies to tell the truth"

Artists also use lies to tell lies, especially political ones.

" I just don't like the general approach of convincing readers with fiction. It appeals to the subconscious rather than logic. I prefer logic in such matters."

The idea behind a parable is to encourage you to think for yourself, not to explicitly convince you of an argument.

Maybe, but it is a deception, because the setup is given by the storyteller. So if you think for yourself, you do so with the assumptions given by the story.

I still think it is simply a device to sway people's opinions. Otherwise, why not just give some condensed facts about the real world?

You're opposed on principle to rhetoric?

That's a prejudice that goes back to Plato.

Am I supposed to like rhetoric?

Like? No. Understand and be able to use, because it makes a lot more sense to a lot of the people on this Earth? Yes.

So you basically agree that it is designed to sway the opinions of people who don't like to think hard about what they hear?

Another place I know parables from is the bible. Does that mean I have to be religious?

No, I don't agree with that proposition at all. Rhetoric is something you don't have to like, but to dismiss it entirely as you have done in this subthread is to do a disservice to yourself. I happen to find rhetoric fascinating, as it has to do with human communication and interaction.

If you've ever given a presentation, you've performed rhetoric (the art of using language to persuade). If you've presented based on measurable facts, you've still used rhetoric. (Indeed, without using other language to help organize and interpret the facts at hand, it's very easy for facts to be used to confuse an issue.)

Parables are rhetorical devices usually used to illustrate a moral or religious lesson. Yet, they can also be used to illustrate other lessons, too. A quick search for "secular parables" resulted in the "Parable of the broken window" as a lesson to be learned about economics.

  http://en.wikipedia.org/wiki/Parable_of_the_broken_window

You can't handle the truth.

A listing of facts contains editorial opinion.

Yeah I know true objectivity is impossible, but that doesn't mean we can not at least try to be as objective as possible.

Transparent bias is better than imperfect objectivity.

I still wonder: did this story make you think "hm, I wonder if trading derivatives is just like gambling in the casino", or did it make you think "yeah, those roothless traders were just gambling, I knew it"?

Fiction can be used as propaganda, but contrast fictional evidence with fictional insight:

http://lesswrong.com/lw/1lw/fictional_evidence_vs_fictional_...

That's what I thought he was getting at, but near the beginning of the piece, he describes Basicland as "rich in all nature's bounty except coal, oil, and natural gas". But the U.S. has enormous coal deposits, and in the 19th and early 20th centuries was the world's largest oil producer. Its natural gas deposits aren't too shabby either.

The problem with this piece is that it doesn't touch on the controversial issues. The purpose of casinos is to entertain. That is a good purpose and they fulfill it well. So the parable breaks down rather quickly because he doesn't even touch on the question of what the purpose of the financial system is and what role derivatives play as part of that.

That's important, because the theory wasn't just that "the market is always right" and therefore we must let derivatives trading run amok. The theory is that derivatives help the financial system to fulfill its role better by making it more flexible, more robust in the face of volatility and risk.

I don't want to go into whether this is true or not, but without discussing the purpose of financial markets, their role in providing finance and the inevitability of speculation, etc, any critique is pointless.

The purpose of casinos is to entertain.

No, although many people go there for entertainment. The purpose of casinos is to separate suckers from their money.

I'm offended by this "disproof by one liner." The linked article is a parable, and trying to do exactly what parables usually do; give you enough distance to revisit something that you already have opinions about.

Maybe you like it, maybe you don't. "Proof by fiction" is simple mischaracterization.

I am not saying the story is wrong, so I don't "disprove by one liner". I don't like the device for manipulating opinion, that's all.

If you read such a beautiful fairytale, you can nod along feeling comfy all the way (maybe sitting in front of a cosy fireplace among friends).

Overall, I am pretty sure opinions are not formed by logic, but by factions - we believe things because it benefits us and makes us belong to our faction. So to create a comfy fireplace fairytale setting is simply a manipulative device. I feel it is a good idea to be wary of such approaches, just as an anecdote is interesting, but should not be sufficient basis for judgment.

You're using straw mans to criticize Munger's position. You're the one who's being manipulative.

I didn't even say that I disagree with his position...

"Proof by fiction is even worse than proof by anecdote."

Where did he assert "proof" in that article?

Dupe: http://news.ycombinator.com/item?id=1144930

Is there much point in pointing out a dupe if there is no discussion on it?

This problem has to be solved by pg, or whoever maintains the code here. It's really too much to expect users to review all posts to see if what they want to submit has been submitted before. It's also too much to expect that there is only one url to the same content.

And as a bonus it's a problem waiting for someone to solve

No there isn't. I've already suggested a solution that will work in almost every case of duplication I've detected, and it appears to be completely ignored.

To be fair the general decline in civility and quality, and the general increase in spam might be regarded as more pressing issues, but the solution I suggested seems trivial to implement and moderately effective.

http://news.ycombinator.com/item?id=1012215

Isn't this what plagiarism algorithms are doing? Scrape the content, run through the plagiarism filter (although not a very strict one to prevent false positives on quotations and the like) and you are done. If there's a match, show it so the submitter can see for himself.

This is my submission and I looked as much as I could. Not only does YC have no dupe check, there's no search either.

http://searchyc.com/

It wouldn't necessarily have helped in this case, but scanning through the previous 12 entries in the "new" listing would've found the duplication.

I looked at the new ones and just didn't pick it up. (I did see it later.) I think I was expecting the original title.

URL detection isn't as trivial as it sounds - lots of edge cases http://visualwebsiteoptimizer.com/split-testing-blog/challen...

I wonder if you could do a quick content check -- something along the lines of:

    Run the content through the "Readability" filter (http://lab.arc90.com/experiments/readability/)
    Hash the first N paragraphs
    Compare the hash on a submitted article to all hashes from that domain

It doesn't have to be a perfect solution. Making an http request to a submitted url and grabbing the contents of the title tag is a trivial development effort that add a lot of value to a community that doesn't want to see the same stuff on the front page over and over...

good article, how can a system based on greed, corruption, and imaginary wealth survive? The U.S. has concentrated less and less on production and innovation, and needs to refocus it's efforts it it's going to get out of this hole. Energy is a great example of where production and innovation is now needed, and could revive the U.S. Economy. I hope this comes to pass.

not trying to single you out, but your post is a good example of the type of rhetoric that i dislike on economic subjects. "feel good" statements about greed and corruption discourage the kind of dispassionate analysis we actually need.

I'll go further: all economic systems are based on greed and corruption because those are parts of human nature. The question is how to you harness the former and limit the latter. We seem to do a very good job with both when compared to the rest of the world.

In terms of the bottom lines of economic growth, standards of living and employment, again, we do much better than the rest of the world (I'm not going to count the special case of China emerging from decades of communism, returning a billion plus people to the world market is a one time thing ... and their recent grow should be weighted against how much they lost economically during the previous period).

I think one of the underlying problems is the fact that economics gets described with such loaded phrases as greed and corruption. such thinking, as if parts of human nature are easily described as "bad" or "good", is what leads to much of the harmful meddling to begin with. it makes it much easier to get confused between intended ends and actual effects. basically, economic problems aren't ethical ones, even though they can cause ethical problems.

I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear. Those are the two basic emotional responses to finance, and the basic question is how do you not fall prey to mental errors because of them. And in too many cases, people use numeracy to force others into making mental errors because of those two basic human emotions, not to mitigate against them. I've started an open blog at financialpreparedness.com to rant and rave about this and other sorts of things.

Could you give us 1-5 paragraphs on your thesis that "people use numeracy to force others into making mental errors" based on greed and fear? I've not heard of that concept before.

I think the gist of it is that people use difficult to understand things as a way of both signaling competence and of intimidating others into not questioning them. think mutual funds who leech off their clients with worse returns than the S&P500. over time the best ways of doing this have been refined, think of the way media outlets use statistics that, while not exactly lies, are at best not the whole truth. and not 1 person in 100 has the competence to debunk the nonsense.

That's exactly what I meant! Thanks for saying it so well.

You'll need to give me another example. Year to year returns after fees from a mutual fund vs. S&P500 is too trivial as long as there are no tax implications (and you can get the latter from your CPA if it isn't a retirement investment).

We're not talking complicated statistics where everything starting with the assumptions must be suspected, we're talking N% return in X year.

that was a simple example where even though the numbers are trivial to interpret people still make gross errors. now look at the mortgage market for instance, where people basically have no idea how home financing works. I hear all the time about how some couple "discovered' that you could avoid brokerage fees by getting a license yourself at trivial time and money investment.

>I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear.

Lots of things are manifested as greed, many good.

You also forgot envy.

I'm being greedy when I'm worrying about what I've got.

I'm being envious when I'm worrying about what you've got.

I claim that envy causes far more problems than greed.

>I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear.

Lots of things are manifested as greed, many good.

You also forgot envy.

I'm being greedy when I'm worrying about what I've got.

I'm being envious when I'm worrying about what you've got.

I claim that envy causes far more problems than greed.

You need to go further:

Jealousy is where you're thinking of what the other has and you want it.

Envy is the same except you know you can't get it.

Since envy gives no one a (material) benefit, whereas greed gives one or both sides benefits, yep, it's absolutely the worst. Of the 7 deadly sins, envy is the only one without any direct reward.

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