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Sure It’s Legal… But Is It RIGHT?
I’d
like to ask your indulgence today.
Typically we
reserve these pages for in-depth analysis of the stock market and economy. But
I’ve grown FED UP with the complete lack of coverage that one area of the
current crisis has received.
Ever since
the Financial system started imploding in July 2007, I’ve heard countless folks
talk about liquidity, bull markets, bear markets, the dollar, bailouts, etc.
But there’s one thing I’ve heard virtually NO ONE talk about. That is:
MORALITY or
ETHICS.
Everyone’s
analysis of this financial crisis is far too complicated. The simple facts are
that it was created by complete and utter greed on the part of various
regulators and financiers.
In simple
terms, the banks (investment and otherwise) lobbied Congress, the SEC, and
other regulators to let them engage in business practices that were neither
sensible nor responsible (excess leverage, financial wizardry that turned junk
subprime assets into “AAA” rated entities, and more). They did this under the
pretence that these practices would be good for the market and US economy as a
whole.
The reality
is that these practices allowed the banks to make ENORMOUS profits: between 1970
and 2003, financial stocks’ earnings as a percentage of the S&P 500’s total
earnings rose from less than 10% to 31%. Put another way, by 2003, financials
accounted for nearly 1/3 of ALL profits made by publicly traded companies.
Now, THE
largest expense for any financial company is SALARIES. So when banks and
financial companies lobbied to have their leverage limits increased (or any
number of other changes that were made in the ‘90s and ‘00s), they did it for
one reason: to collect HUGE payouts.
These folks
were driven by greed and nothing more. They didn’t want more people to own
homes. They didn’t care if folks lost money buying the AAA rated garbage they
pawned off on pension funds and the like. They didn’t care if their OWN balance
sheets were cesspools of crap loans no one would ever pay back. Heck, they
weren’t even looking after their shareholders (leverage of 50-to-1 makes it
extremely likely you’ll end up wiping out ALL equity sooner rather than later).
No, they
wanted one thing and one thing only: to make as much money as they possible
could.
And boy did
they.
In 2007, the
average Goldman Sachs pay was $661,000. For Morgan Stanley it was $340,000.
Again, these guys were after one thing: BIG PAYOUTS.
So now we
fast forward to the financial crisis.
Ever since
this Crisis began, the guys behind the bailouts and other “solutions” have used
the law or legal precedent to justify their actions. Bernanke, for example, has
cited all kinds of laws that give him the right to throw tax-payer money
around, monetize debt, and all the other financial hocus pocus he’s engaged in.
Same goes for Hank Paulson (who somehow managed to convince the government that
he was an impartial figure despite making $500 million+ at Goldman Sachs).
But no one
has EVER used the phrases “this was the right thing to do” or “this was a good,
moral action.”
Perhaps I’m
a naïve fool who belongs in a Disney movie or a Charles Dickens novel (where
good and bad distinctions are always clear), but I don’t see the ethics or “moral
right” of any of the stuff going on in our financial system today.
I don’t see
how it’s “right” for the US central bank to destroy our currency so that
Goldman Sachs can pay itself 2007 level bonuses again.
I don’t see
how the same folks who created this mess (Hank Paulson, Bernanke, etc) should
be allowed to try and fix it.
I don’t see
how it’s “morally correct” to funnel tax-payer money to Wall Street BUT not to
small businesses and the like (if we’re going to bail people out or help them,
why not focus on the 17 million small businesses instead of the 10 biggest
banks?)
I don’t see
how it’s “ethical” to allow Goldman Sachs and other High Frequency Trading
Program operators to “front-run” me and everyone else who participates in the
financial markets (Goldman’s traders only lost money two days last quarter…
that is statistically impossible unless you’re cheating).
Bottomline: I don’t see ANY actions that
are truly aimed at helping MOST of us (the RIGHT thing to do). All I see are
huge sums of money (my, yours, our children’s and our grandchildrens’) being
thrown at guys who:
1) Made
a ton of money pursuing reckless business practices, screwed up, and should go
broke or be fired
2) Have
shown ZERO responsibility for the actions they pursued that caused this Crisis
3) Have
yet to offer any real solutions (or changes to their business practices) to
help SOLVE the Crisis
Basically,
we have a very small minority of Americans who believe they deserve a FREE
LUNCH. These folks are Wall Street and the banks (the alleged pillars of
capitalism).
The irony
here is that the basic tenant of capitalism (and MORALITY) is responsibility
for one’s actions. If you pursue reckless business practices in the name of
greed and those practices turn against you, you SHOULD GO BROKE. You don’t get
to keep everything, keep calling the shots, AND get other peoples’ money as a
reward for your mistakes.
Never-mind
the legality of this issue… it’s simply NOT RIGHT. End of story.
Let’s put
this whole issue into perspective. Imagine two salesmen working at the same
firm: Bob and Frank. Bob lies to his clients, embezzles money, and generally
engages in business practices that could damage his firm. Frank, on the other
hand, never lies, doesn’t cheat his clients, and always watches out for the
firm’s best interests.
Now, what
sane business owner would give Franks’ salary and commissions to Bob?
NO ONE.
And yet,
this is exactly the “solution” Ben Bernanke and others have been pursuing in
dealing with this Crisis. They are giving OUR money to people who created a
MESS. Again, forget about whether or not this is legal. It’s not right. Never
has been. Never will be.
And I don’t
think I’m totally misguided here.
The ENTIRE
financial system runs on trust (credit and debt are issued based on your trust
you will be paid back). If you want to fix the financial system, you need to
restore trust.
Ben Bernanke
is working overtime to make the banks trust each other again… but he’s
sacrificing an even more important “trust” relationship to do this. That is the
trust Americans have for Wall Street/ the banks/ regulators/ etc.
It may have
gotten Ben Bernanke re-elected… but it’s going to destroy Americans’
retirement, incomes, and prosperity.
And that
simply is not right.
Good
Investing!
Graham
Summers
PS. If
you’re getting worried about the future of the stock market and have yet to take
steps to prepare for the Second Round of the Financial Crisis… I highly suggest
you download my FREE Special Report specifying exactly how to prepare for
what’s to come.
I call it The Financial Crisis “Round Two” Survival
Kit. And its 17 pages contain a wealth of information about portfolio
protection, which investments to own and how to take out Catastrophe Insurance
on the stock market (this “insurance” paid out triple digit gains in the Autumn
of 2008).
Again, this
is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com
and click on FREE REPORTS.
PPS. We ALSO
publish a FREE Special Report on Inflation detailing three investments that
have all already SOARED as a result of the Fed’s monetary policy.
You can
access this Report at the link above.
- advertisements -
Nice pipe dream Zero, have you given thoughts to the logistics of that? Start typing away, dude, I'll sign.
Generally you'd start by knocking things back to a feudal system, with yourself in charge of your fiefdom, organising things. Not sure who is going to provide the content to my satellite dish and internet streaming subscriptions under that scenario. Do tell.
i no longer trust anyone and the bigger they are the less i trust them
I love commenting to the movie "For a Few Dollars More." Now you were saying something about morality and ethics?
John Bogle called it predatory capitalism. Pretty much sums it up.
Also, take a look at Ray McGovern up against the smary Secretary of State spewing a bogus lecture over human rights and freedom of speech while a silent protest is removed in front of the audience with obvious violence for all present to witness.
http://www.zerohedge.com/article/revolt-spreads-america
What kind of message does that send? Imagine what was running through the minds of members of the audience at witnessing such a blatant insult to plain common sense.
And, how does a public servant supposedly dedicated to a lifetime of public service, H Clinton or others of either party end up with a net worth in the order of possibly up to $50 million dollars or more as recently reported by ZH?
And yet it continues on a massive scale and it will be repeated over and over and over again. Who are you/we really raging at? Those who rape and pillage because there are green lights as far as the train tracks run signaling greed is good, very rewarding and won't be punished. Or are you and me angry at you and me and they and them and us for allowing this to continue way past the point where it should have been stopped? It almost sounds like we've held onto a losing stock way too long and now we're blaming everyone else but us.
What do you do when the burglars have broken into your house for the fifth time and the police don't come when they are called....and they never will? What do you do when you are repeatedly assaulted and instead of throwing the assailants in jail, you are beaten by the cops and warned to keep your trap shut or they'll come back and finish the beating? What do you do when your protectors are your tormentors and everything you thought you could believe in isn't true and probably never was?
The cavalry ain't coming, the bad guys are running amok and no one is coming to your rescue no matter how hard you cry or how angry you become. When will you hit bottom and recognize that the only one who can protect you is you, me and everyone else? The solution is simple and the answers are right in front of us. The difficult part is wading through all the denial to arrive where we always knew we needed to go.
CogD....I understand what you are saying, and appreciate it, but even if the denial phase is overcome, I simply cannot see a populace with such disparate ideas as that of the US coming together per a common theme long enough - and serious enough - to accomplish what has to be done. Oddly enough, we are - due to our state structure, our history, varied racial and religious makeup and mostly bipolar political system - a people both blessed and cursed with an insular nature. The physical size of this country also adds to our isolation in that painful events in one locale are merely news curiosities in another. Our very freedoms (as they are) are also a blessing and a curse....it has made us a collective mass of individual fiefdoms of personal ideology and suspicion of our neighbors. I can hardly imagine - and shudder at the thought - of an event that would finally, pull us together with the kind of solidarity that would overcome this, and the distractions of our many comforts. I think I also know where we need to go, but I have to worry about the journey.
Having read the entire thread as it exists at 9:30 AM ET US, I appreciate your dialogue with CD as well as the other well-reasoned comments (why, I don't think I saw even one "bitchez").
I think both Aris and CD are correct in their own ways but these might be mutually incompatible. CD (having read most of your stuff), you want an internal mindset change and believe that granularly this will change the world on a more macro level. In some ways similar to Leibnizian topology (perhaps in inverse). For Leibniz, each monad is contentless and only dervies meaning from the interpenetration and the interconnectedness of all monads. A single monad is in its place only in relation to all other monads. Change is possible only when the position or quantity of other monads occurs. Inversely, one may say that because each monad is contentless on its own it is full of content, that is, complete absence and complete fullness are the same, they both lack graduated contrast. So, CD seems to be saying each one of us can change our mindset and the interconnectedness will cascade throughout the web. Don't try to change other monads, be a monad that changes and this is sufficient to create a ripple effect.
I have my Leibnizian sympathies but these are mostly theoretical in nature. So, I have some empathy for Aris' position. There are discontinuities large enough to foil the "tend your own garden" approach. I do not believe that large scale change can result simply from changing individual's mindsets. This is why I (for the time being only theoretically) would only advocate changing mindsets on a small scale and changing the world into a "bigger" world. I personally want all of my family in closer physical proximity and less dependent on an outside world for sustenance and continuation. So far, they ain't buying it. The USA is simply too big to endure as anything but a repressive state, I agree with Aris regarding heterogeneity not being overcome at this scale. One might aver that heterogeneity can only be recognized and accepted at a level of direct political participation and not vote based representation. This is pretty damn small.
Beyond physical efforts to fight what one believes to be governmental repression one can, as CD suggests, alter one's mindset and prepare for change that way. I also advocate utilizing shame and shunning others one knows who continue to refuse such a mindset change (it's a lonely world). Then one can bit by bit "fall off the grid" by growing food or paring back on things which require external entities to provide them (electricity, water, medicine, etc.). In many ways, violent revolution is called for but I agree that replacing one bad set of humans with another bad set of humans is not progress per se. Hence, "shrinking" the world as a rational path forward. One would have to give up a great deal of what we collectively view as progress (medicine and surgery, certain foods, the ability to traverse large areas of land, etc.) but we *may* find the trade off worth it. That's enough for one stream of consciousness dump for now, 99% of people stopped reading three paragraphs ago. But there is room for both CD and Aris to partially correct and incorrect here.
We don't need to "come together" in order to end this insanity. As long as we believe that is a requirement, that we must mobilize so that we can meet force head on with force, it will never happen. And we have been conditioned to believe this is a requirement precisely so we will short circuit ourselves even before we begin. It can't be done the way we think it must be done so why try anything.
Why would we possibly attempt to oppose or resist the powers that be at their strongest point? Why would we meet a power structure head on if that's exactly how they have designed their system to be the most formidable? The powers that be are like an engineered floor truss. It's designed to become even stronger when force is applied. The way to collapse an engineered floor truss is to break it's connections. And by carrying on with our daily lives, we are those connections. We are holding together the very floor truss we claim we can't break. Just let go.
Our strength is precisely what you have outlined is our weakness. We hold ourselves together to hold the system together. Just stop going along to get along and the system will rapidly collapse. The social bonds and mechanical infrastructure will remain. The heads of state will collapse. Instead of meeting the powers head on, just stand around and do nothing. Go limp, don't participate. Their power comes from our participation.
[We don't need to "come together" in order to end this insanity. As long as we believe that is a requirement, that we must mobilize so that we can meet force head on with force, it will never happen.]---CD
I read the questions, "What went wrong" and "What's the solution." Incredibly important both. Dire.
And another question regarding the US specifically, "Is our Constitutional democratically elected federal republic self-resetting." Did our Founders create a system of government with enough built-in safeguards (i.e. protection of natural rights, rule of law, explicit limitations on government, divided government branches with competing checks on power, dispersed power to the states, etc.) to survive the crisis we now face?
In our Founders' words, No.
The glue holding together all the hard won pieces of the our Founding is a moral people.
It always comes back to the Individual.
Agreed. The problem is fear. There are more people who continue to participate out of fear of the unknown (change) than people who are willing to endure hardship for the desired and needed result.
The status quo participants also will not participate in any "revolution" or "uprising" because they have been brainwashed with patriotism, and do not see the need. They have hope that things will return to normal in the near (or not) future, whatever normal means. Psychologically, it is no different that the German Socialist (nazi) patriotism in the '30's, even though the politics are different.
So the way forward is the peaceful protests that we see in other parts of the world. There is a history of that in the US. Remember the war protests of the 60's and 70's? There were protracted, but in the end effective. And support grew. There is a unique opportunity in history here. The US gov dare not fire on it's citizens without incurring much wrath around the world, and destroying it's credibility everywhere. Take advantage of that my friends.
based on G-8, G-20 protests, even 1968 DNC protests, you can easily conclude peaceful protest in the US does not work
any new 'leader' like an mlk,rfk,jfk will be shot
the statement that we dare not fire on our own people is why we have non-lethal weapons in our arsenal....for just that reason, that we would lose credibility if we killed our own people
there is no framework within the present system that allows for actual change to a more fair system....the government NEVER gives power back to the people
the law is never applied uniformly
the government rules by force and threat of violence
it is thought crime to pursue this to its logical conclusion
I remember Kent State (sort of). I wish more American's read up on it. It brought about rubber bullets and research into "crowd control".
The discussion above is entertaining. The overall problem is "normalcy bias". Only 1% of the people I know believe that the world 5 years from now will be any different from today, and the rest borrow and consume and watch "Idol" like they did over the past decade. They need a shock, but not a violent one.
Perhaps a Labor Day when you can't buy a steak at the market. No NFL season or baseball playoffs, something that has occurred every year like clockwork that disrupts the bias.
Even people who might want to participate in massive change fear that the people advocating such - who seem to have no regard for the people they hark to force such change - will end up running things. The system that would emerge from a collapse of the present US gov will not be better, since people will be running it. Even the people with the best of intentions are ultimately corrupted by power. Per the anti-war protests in the late sixties, I was in Vietnam at the time, and I cannot remember anyone who felt they had our best interest at heart. We felt they had their own agenda (not ending up where we were), which was fine - and understandable. But, in the overall context, the Vietnam war was doomed to failure from the onset, something I did not realize at the time. The people I was with felt they were doing the right thing...of course, we were teenagers. BTW, the US Gov may not fire on civilians, but the tell of the tape is what state National Guard troops do. To be brutally honest, in 1969, if my immediate commanders had ordered me to shoot hippies...I think I might have. I am very glad though, that I will never know.
Some of your solutions in the past have sounded socialistic at times and there is sometimes a class warfare or populist tone I detect. It would be hard to have those in the disengagement and subsequent collapse of expansive government. I am all for a weakening of the 'powers" and setting up a system where " powers" cant be used against liberty and freedom, but such a weakened state such that power cant be amassed and used to control people is not likely to be a state loved by populists and people who have social justice or distributive justice tendencies.
I have never offered "solutions". What I have consistently said is that the problem begins and ends within ourselves, that we support the very system we condemn and that we can end this all very quickly if we wanted to. Your labels roll off my back because they are meaningless. I choose to see the possibilities while so many others would rather see impossibilities. The victim in all of us feels so much better when we are excused from ever trying.
the problem begins and ends within ourselves,
Your labels roll off my back
see the possibilities while so many others would rather see impossibilities
You should change your name to Grasshopper then.
I agree with you that the problem begins and ends within ourselves. I also agree that we are too invested in it to see any way out, collectively. I also believe that we are too disparate of nature and thought to arrive at such a point easily. I do not see "impossibilities," I do see difficulties based on my viewpoint of reality. What I would like to see from you, as a person of obvious intelligence and experience, is an inkling of what you would consider to be solutions. I know what the problem is, CD....what I want to hear is a range of potential solutions from credible people.
There are no solutions based upon the current power structure remaining in place. Period. There simply are no viable solutions to offer if any solution offered involves those who have power to voluntarily give some or all of that power up. And simply shifting power from one connected group to another under the guise of "elections" isn't giving up power. The apple cart must be upset before anyone can begin to propose "solutions".
If the powerful remain in place and the people continue to support the powerful, the only solutions that can be offered involve how the disenfranchised will deal with the continued and growing disparity in resources, power and freedom. The (global) social and economic system is beyond dysfunctional, beyond broken. Humpty Dumpty has fallen and can't be put back together again and we are all in various degrees of denial as long as we don't recognize this simple fact.
BTW may I suggest you read the numerous ZH articles I have written on a variety of subjects such as this going back to October of 2009.
Basically you're saying that you're all for bitchin' until a Black Swan lands and starts biting people's heads off! Brilliant, why couldn't I think of that? </sarc>
So, in the classical sense of the word, are you suggesting that a form of global anarchy is the only way to break such an impasse? or, maybe a form of civil revolution based on a common theme? If so, you may well be right. But, the only outcome I can see from anarchy is a kind of feudal society structure that would likely end up being based on religious or clan affiliations. Or...are you suggesting "real" communism, which could stem from a civil revolution....or possibly - if you are really being bold, a civil world order based on a unified global structure where everyone is required to do a stint as some kind of representative ombudsman? Interesting. BTW...I read your statement that you had never offered solutions, so I was just trying to draw you out on that a little. I think you are dropping some hints here....keep going.
...this from a guy who begged everybody to sell Silver last week.Have you no shame?...just end it.
Maybe....but that too takes organization - of thought anyway. Non-participation? Hell, I have done that for years - never invested, never voted, lived overseas most my life, keep money abroad (in foreign currencies), buy very damn little, don't have life or health insurance.....I am basically a non-person per participation is concerned. BTW, I have a very good understanding of trusses - engineered and otherwise, if they are glue laminated, you will play hell breaking the connections, since they are integral. If they are bolted, you have to remove the bolts, which under load, takes a tremendous amount of force. They can also be overloaded beyond their ultimate strength, in which case they will break. It pays to have a very good understanding of the truss you are trying to force to failure, and, might I add, the consequences that might result from it.
I don't think you understand how fragile the economic system is. It is not a laminated truss nor one that is bolted. The connections are very weak and growing weaker by the day. The proof is the magnitude of Fed intervention on a daily basis, including so much propping up that is hidden under the surface. The more complex a system is, the more unstable it becomes when sub-systems don't work.
You are welcome to continue to believe how difficult it would be to overcome the powers that be. And I am welcome to continue to look for the simplest solution that will work. If 30% of the labor force just stayed home for a few weeks, it would all shut down. We can find all the reasons in the book for why this is impossible. And yet the citizens of a least one ME country are already planning a nationwide strike. So it seems organization can be created and maintained even when the Internet is shut down and there is blood in the streets.
As far as what the consequences would be to breaking the truss, normalcy bias tells me we must keep it supported even if it is destroying everything in the process. And this belief is supported by the very system that depends upon our support and continues to enslave us by our own hands. Normalcy at any price is too high a price to pay and once that is understood by enough people, say 20 or 30%, the tipping point will be reached.
I do understand the frailty of ANY economic system. And, I am not suggesting that the US system could not collapse, what I would argue is the consequences of such a collapse, based on the DEGREE of the collapse. And, what are the powers that be? I think the powers that be are our own belief system, where you seem to think they are the people running things. We are just like them. Give us power, we will be just as corrupted and just as self-interested. BTW, I think your argument would be better served - structurally - if it was based on a space-frame, and not a truss.:)
I have consistently said over the last year and half that at it's basic level the problem is our conditioned belief system. This is why I always say it begins and ends within. But it is this collective belief system that supports real people who control real power.
May I suggest you read some of my ZH articles going back to October of 2009. I am not denigrating you in the least, but you have only been here less than 5 months. I covered much of this ground over a year ago and when I cover it again I'm accused of endlessly repeating myself. So I refer you to my older articles here on ZH.
Thank you for the polite and respectful conversation.
Fair enough, I will search through those articles. But, repeating yourself is not always a bad thing if the thing deserves repeating......I learned multiplication tables that way. But, one thing you may not have covered....do you think that an event is likely in the US that would force a change in this conditional belief system (which I also think is the root of our problems)? And, would this collective shattering of what is essentially our history, result in violent revolution? CD...I am always polite and respectful, except of course, when I am not.
Stop looking for the black swan, or collectivist action, just be the grain of sand that you are. Do what you feel needs to be done, and that's all you can do. If you wait for the herd to move first it won't ever do it, but step out on your own in your own direction and the herd just might follow. Be the change you wish to see, to paraphrase Ghandi. Do what's right, in your own heart, and you can't be wrong.
Call it the waterfall effect. Deep down its embrassing knowledge that you know you will some day die. And knowing this, you seek to live a furfilling life, for the purpose of living a furfilling life.
Chop wood, haul water before enlightenment.
Chop wood, haul water after enlightenment.
Plant a garden, raise chickens, make mechanical marvels, mine & save. These are like objects. It takes loving, hating, struggling, and succeeding to make them all worth while accomplishments.
""Plant a garden, raise chickens, make mechanical marvels, mine & save""
It's certain, US Govt Closing down in Two Weeks...March 4th....
http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/02/its-certain-us-govt-shuts-down-in-two.html
CD... please can you point me toward where I can read your full treatise from last year.... the one in several parts. Thanks
I assume you are talking about my 5 part "Welcome to the Insane Asylum" series. Here is a Scribd link. Once there it can be downloaded. And on the first page are the actual 5 links back to each part on Zero Hedge. Also the ZH link to Chapter 5, which contains the links to the other 4 chapters.
http://www.scribd.com/doc/33507389/Welcome-to-the-Insane-Asylum-Our-Collective-Psychosis
http://www.zerohedge.com/article/welcome-insane-asylum-%E2%80%93-seeking-moral-courage-chapter-5
Also here is my two part "What if it Doesn't End With a Bang But a Whimper?" series
http://www.scribd.com/doc/37045448/What-if-It-Doesn-t-End-With-a-Bang-but-With-a-Whimper