The NRA people like to pronounce on a regular basis, that "guns don't kill, people do," and of course they are right in this: someone has to pull the trigger. By the same reasoning, Credit Default Obligations don't destroy either, it's the people who sell and buy them that make poor decisions. Society demands certain standards from people of all sorts who sell things that can be harmful and dangerous under certain circumstances, whether they be guns, liquor or super sophisticated securities.
The spotlight is now on Goldman Sachs and other big Wall Street bankers, as well it should be. The Wall Street they dominate is a travesty of the one I knew. Over and over, on April 27th, I heard Goldman officers tell the Senate Banking Committee (with scarcely concealed disdain) that they were merely market makers, selling to experienced investors what they wanted, regardless of the quality of the investment instrument. There was no concern about suitability or restraint. What could possibly be wrong with that? Gosh, nothing, unless you look at Goldman's efforts to sell CDOs to, say, Greece.
Today's news is that Greece's economy is in a "death spiral" that will greatly damage the European Union and inevitably, the United States. Is it possible that those Greeks weren't quite as sophisticated as "Fabulous Fab", or his bosses? Regardless, impeccable Goldman showed them how to bury debt, keep it off the books, by pledging future revenue no one would ever notice as missing. If they want to buy it, why shouldn't we sell it? The reason is all too evident. The profit motive is enormous, too huge, by a mile. When I was in the Street, I saw people sell dull stuff to their grandmothers for a fat commission. The stakes for "$9,000,000 bonus Lloyd" and "Fab" are much, much, higher and they want every dollar in circulation, even the small change of gullible orphans and widows who became targets of opportunity at an airport. The hell with morality and restraint. They are as uncontrollable as individuals in seeking ever more millions as any drunk in need of rehab. Accordingly, they must be heavily scrutinized and regulated. A hefty bank tax would be fine. So would a windfall profit tax. That's my take.
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I like the spartan discipline in earlier post. Did you read the Big Short? It is described as a case of most of these wall st types not having a clue really what they were betting against. The sub primes were apparently rated very poorly, only a few , a small handful, including a guy with asperger's syndrome and a gift for numbers were able to figure it out. Most of the firm giants didn't even understand the process of selling the shorts. Well its interesting anyway. i didnt get all of it, but I had passed along the title to Kevin thinking he may like it.
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