Thursday, October 02, 2008
God Bless America
The bankers are dead, says Gapper, next up, the lawyers. Meanwhile, Garton Ash writes a sane column warning against schadenfreude at the plight of America's model of democratic capitalism. He's right. America is the best boss nation we could have. If you think it has faults, try and imagine living in a world dominated by Russia or China. Of course, one of these faults is fundamentalism - religious, political, military and financial. The latter form has created the present mess. Treating its adherents with anger and derision is a present obligation but it is not anti-American.
Subscribe to:
Post Comments (Atom)
A blog about, among other things, imaginary ideas - What ifs? and Imagine thats. What if photographs looked nothing like what we see with our eyes? Imagine that the Berlin Wall had never come down. What if we were the punchline of an interminable joke? All contributions welcome.
Wishful thinking about the lawyers, Bryan. They will do very well out of this mess, as will the accountants and, I fear, the consultants. It's only people with real jobs that need to worry.
ReplyDeleteYeah, let's give the lawyers a break.
ReplyDeleteThey're not all bad, it's just that 99.9% of them give the rest a bad name.
The ancient world often did very well with eunuchs who proved able administrators, civil servants and occasionally even generals. Lawyers and bankers should take note or it might be scissors time. But I'm sure Sophie is right.
ReplyDeleteThe bail-out which may not be is only a stop-gap. What's needed is a fairer way of doing things that puts the little guy back in the centre of the frame. Stuff like giving courts the power to alter mortgage debt to avoid foreclosure and homelessness and capping executive greed, not least because fleecing shareholders is easy when the shareholders are all big institutions in on the game, even though those shares represent the small guy's savings. As Garton Ash points out, most of Washington's politicians are in on the game too. If Obama wants to re-establish some authority in politics (i.e., re-establish popular support for politicians) he is going to have to do one heck of a cleaning job on the stables.
It's looking increasingly likely that within a decade, America will have to power share world domination with the Chinese, who knows, this may eventually be no bad thing, providing it doesn't finish up in a Godzilla versus King Kong titanic struggle.
ReplyDeleteIt could be a lot worse, imagine a world dominated by the Swedes. This years Turner-Nobel prize has been won by Ernie Smith, painter and decorator from Sydenham.
It could be a lot worse (2) lawyers dominating the world, hang on, they do, it is a lot worse.
Lawyers as the great PJoR put it are gangsters with briefcases.
ReplyDelete"The latter form has created the present mess."
I beg to differ on this, its not just the financial fundamentalism of masters of the universe that thought they could eliminate risk, it was as also the political fundamentalism of pols believing that if your hearts in the right place it must be a good thing, and then interfering in the market place with massive quango distortions.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=print
And a cheer for the accountants who have identified the "regulation" (less is best it breeds irresponsibility) that is turning this into a horror story when it should just be a market correction.
http://eureferendum.blogspot.com/2008/10/heart-of-crisis.html
Old joke but: the difference between an injured skunk and injured lawyer in the middle of the road? There are skid marks around the skunk.
ReplyDeleteWhat about the chartered accountants? Desperate to shed their Monty Python image, they've been pocketing fat fees and allowing their clients to say 2+2 is whatever they want it to be in their balance sheets. What a racket.
As an American who just saw her retirement $ in stocks disappear, I'm very curious about the bailout plan. Probably good the first version didn't pass -- it means the pols in Congress (and they *are* mostly lawyers) are thinking hard about its consequences and long-term effects. Seems they have learned something from too quickly endorsing a plan (read, the invasion of Iraq0 without first really analyzing it.
ReplyDeleteGreed is still the culprit here and it's what needs to be extirpated, or at least kept in check. Greed in the iffy loans that were made to people with bad credit; unbelievable greed in the kind of severance packages CEOs get, even when their companies crash.
Money, as someone said, is the root of all evil.
Timothy wrote that the love of money was the root of all evil. It isn't money itself that is evil.
ReplyDeleteMoney, like fire, can be used for good or ill, depending on the character of the person who possesses it. But money can be worshipped with as much fervency as that golden calf in Moses' time. In Dow we trust!
My parent's generation were familiar with the Puritan ethic of living within one's means.
Adam and Eve were allowed the moral choice to accept or decline the forbidden fruit. Many people who have refused to feast on the money tree live simply, within their means, and seem far more content than those who are trying to horde their wealth. Chritians used to regard that as covetousness. Here endeth today's lesson.
Greed is not the culprit, but plain, unadulterated stupidity.
ReplyDeleteThe difference between today's bankers and those of yesteryear is that today's bankers actually bought the crap that they used to foist upon the rubes. They consumed their own toxic waste.
And looking out for the little guy has a lot to do with this mess. It was the do-gooder impulse to make homeowners out of people who could barely qualify to be renters that got this party train rolling in the first place.
But the current financial crisis was largely enabled by stupidity based on an illusion of risk mitigation. The mortgage market failed because too many risky mortgages were originated, and too many risky mortgages were originated because everyone thought that they had diversified their risk away. It's a "tragedy of the commons" scenario. No one was incented to look out for the quality of the total aggregate mortgage pool. Because everyone bore the risk, no one was responsible for the risk. If every bank had to account for the full risk of all of its assets, then the number of risky assets would never have grown so high.
I say ban credit default swaps and every instrument that allows one party to assume the risk for another parties assets. Force every bank that originates a mortgage to hold it in its portfolio. That will take care of the problem lickety split.
Stupidity *and* cupidity, Duck. God how I love that phrase, and I even think I made it up....
ReplyDeleteI think you may be seeing things from the wrong end of the telescope, Duck. It was precisely because Joe Sixpack was left out of the equation that he was thrown to the wolves. Or, at least, to a frenzied horde of finance salesmen all of whose bonuses and probably salaries too depended in the end on one giant pyramid scheme. The whole shebang only worked so long as the market kept rising. Some other countries are much stricter about how much someone is lent and under what circumstances, for good reason. France comes to mind. No easy loans or mortgages there. You don't have to like the French to conclude that in some regards they are, collectively, better at looking after their own than the Anglo-Saxon model is currently proving.
ReplyDelete