Immorality – The Bank Lawyer Version
“Many of us (including yours falsely) in the fat and happy land of milk and honey, have been busily filling our pie holes and demanding a larger share of an economic pie that we expect will grow larger and larger until the sun burns out (or we croak, whichever comes first), and are complicit in fostering attitudes that institutions like Bear Stearns merely reflect. After all, Bear Stearns is nothing more or less than the collection of human beings who own and run it. It’s not as if the legal fiction that is “Bear Stearns” could “strike a pose” or “have an attitude.”
I think the crux of the problem with many aspects of American life is that many of us want, with a libertarian ferocity, absolute freedom of economic action and, simultaneously, an absolute freedom from suffering any adverse economic consequences as the result of those actions. Would Wall Street have idly stood by if Congress, state legislators, and/or federal or state regulators “stifled” their ability to create the subprime mess (“You’re thwarting innovation and depriving the poor of access to credit and the American dream of home ownership.”)? No, they would not, …
As the inevitable excesses unwind, does anyone really expect that the majority of the American public, even those who most heartily wring their hands about “moral hazards,” would be willing to suffer the economic dislocation that would likely occur if the federal government didn’t intervene (especially in a presidential election year) to cushion the blows …It’s great to teach the “big boys” lessons about “moral hazards” as long as I can still afford my Venti Caramel Macchiato and raspberry scone. The federal government is doing precisely what the average Jack and Jill wants them to do: “Make my life painless…”
I am very skeptical that this process can be truly painless. This reminds me of Whack-a-Mole. You think you’ve solved the problem by filling the hole, but the mole just pops up downfield and this continues. Until the real throbbing pain sets in.
However, this is literally NOTHING compared to what the pain will be like when we face the consequences of our squandering of natural capital. Read “The Value of the World’s Ecosystems and Natural Capital,” Robert Costanza, Nature, Vol. 387, May 15, 1997.
In the words of a true Homo Sapien, I hope I’m dead by then.
This is outside of my area, but I actually don’t think that most citizens expect the gov’t to make life painless, but I would say that if there is “an act of God” that assistance is expected – such as natural diaster (e.g, hurricane Katrina) or a horrific economic event (e.g., the great depression). Therefore, I believe that the author(s) missed the mark in a big way. My tax rate does not feel too painless, and the last time I checked no one from the Gov’t has bailed me out of a bad investment decision.
The Bear Stearns story is still unfolding – I’ve not followed it closely, but can it be argued by stepping in a opening the Fed window a possible metldown was avoided, and so far has any of this actually cost the taxpayers (yet) ? I think the Fed blew it by forcing some crazy deal with Bear Stearns over that weekend, and then on Monday deciding to open the window. It is clear that Bear is worth far more than $2 per share, as evidenced by the transfer of $13 billion of market cap to JP Morgan on that Monday, and the news today that the offer is $10 per share (still way too low, BTW). I have no interest in Bear, and have no shares, but that whole deal looks fishy and bizarre, and only a select few people know the real story there.
Anyhow, getting back to the point, most people don’t expect things to be painless, but we do want the gov’t to step in before a doomsday scenario sets in. That is a common belief for all citizens of all countries. Why else do we have countries and gov’ts?
I agree with the comment above on the drain of the natural resources. That us beyond the reach of any one country, I think. In any event, perhaps our “Soylent Green” days will arrive sooner than we think…
Final Four Guy