After a Greed Orgy, the Big Money Guys Get Repentant. Don't Trust Them.

Categories: Schutze

Wait. Time out. Take notice. We are experiencing a new form of national crisis. It can no longer be denied. The United States is now suffering from a crisis of Total Wrongness.

Most people are going to think the trigger was a mea culpa speech a couple days ago on the CNBC money show, Squawkbox, by former Citigroup Chairman and Chief Executive Sanford I. Weill, the guy who invented the financial "supermarket," the banking equivalent of a naked, oiled-up, stoked and stoned money orgy.

Admitting that, on second thought and in view of the global financial disaster spawned by them, totally deregulated money orgies are maybe not the best way to run the world, Weill told CNBC: "What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that's not going to risk the taxpayer dollars, that's not too big to fail."

You think? 

Having stolen, skinned and eaten all our horses, guys like Sanford Weill are now advising us to close the barn door. Thanks a lot.
But my own preferred candidate for triggering event came a couple weeks ago when JP Morgan CEO Jamie Dimon told Fox Business News, "We screwed up." He was referring to Morgan's "London Whale" problem, a loss of nobody-knows-yet-how-many-billion-dollars because JP Morgan's supposedly hugely sophisticated investment "system" turned out to be little more than an unbelievably bad gambling problem.

No matter what started the avalanche of wrongness, now everybody's rushing to get in. Today The New York Times, a newspaper known unofficially around my house as the "The Even Newer Testament," heaps ashes on itself in an editorial, taking blame for having supported bank deregulation: "Having seen the results of this sweeping deregulation, we now think we were wrong to have supported it."

Yeah. Yeah. I see that. I'm sorry. It sounds a little lame, sort of like if the Japanese in 1945 had said, "We now question the wisdom of invading China." But there you have it. Culpa is culpa. Plenty to go around.

I'm too insignificant to merit an entire crow on my plate, but I did nibble a few feathers last year after reading Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon, by Gretchen Morgenstern and Joshua Rosner. They explained in their book how Democrats and other supposedly liberal champions of the people had feasted at a sleazy banquet table laid deep for them with cash and nepotistic job opportunities by Fannie Mae CEO James A. Johnson in exchange for some more of that really good dope, and you know which kind I mean. Yup. Oh, man.


What's important here? My crow, your crow? No, no. We're talking global crow. In that same newspaper, the Even Newer Testament, Paul Krugman has an important column today pointing out that the whole debt-scare got-to-be-austere doctrine that somehow swept Europe and this country over the last two years has turned out to be bullshit.

Instead of sending interest rates through the roof, instead of sending people to empty-shelved grocery stores with wheelbarrows full of worthless currency, the so-called debt crisis, Krugman observes, has produced record low borrowing costs and a splendid opportunity for investment in teacher salaries and road repairs -- the opposite of what we're doing under the current regime of Total Tea Party Looney-Tune-acy.

"The failure of deficits to produce the predicted rise in interest rates is telling us something important about the nature of our economic troubles (and the wisdom, or lack thereof, of the self-appointed guardians of our fiscal virtue)," Krugman says.

So there is my point. Go back over those words, "self-appointed guardians of our fiscal virtue." Who would those be? C'mon. This is not a tough question.

The self-appointed guardians of our fiscal virtue, the ones who wanted us to be austere while they were greased up and stoked, would be the long-toothed cash-o-crats like the Koch brothers who conned us into all this crap in the first place.

I'm not trying to give us an excuse. It's still up to us common folk to take care of the common weal. That's our job. We have to remember that it's our job in this particular country because Thomas Jefferson and John Adams and a bunch of those guys back in the day thought that we the people were smarter than the cash-o-crats, who were called quaintly back then "aristocrats."

Cash-o-crats, aristocrats, same-same. Guys with a whole lot of money. Not supposed to run America. Whole idea behind democracy.

There is where we went wrong. It's our fault for going wrong. But we need to see where we fell off the trail. We fell off the trail when we lost faith in ourselves and in our collective wisdom as a democratic people and started instead leaving everything up to so-called "business leaders."

Those guys aren't business leaders. They're uber-rich pirates. A business leader is the dude you might sit next to at an Optimists Club luncheon who owns a couple Exxon stations and a fast food franchise. He's somebody who understands the nexus between hard work, entrepreneurial know-how and a willingness to take risks.

The people in Washington and on Wall Street who have conned us into letting them run the country for the last decade are not that guy. They're not entrepreneurial enough to spread their own napkins in their own laps. They are missing a big chunk of what that guy at the Optimists Club has. It's called giving a rat's ass about the community. The country.

We all need to do some mea culpa. We've all been wrong. But we need to get right about what we were wrong about. We have trusted the wrong people. We need to trust ourselves again.

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Among people who know what they are talking about, Krugman is about the most respected public economist around these days.  He has indeed been warning that austerity is wrong at this juncture for a while, and interest rates would not rise because demand had been obliterated along with 40% of the average American's wealth.  You can't have interest rates rise if no one is borrowing and the Fed chairman is easing quantitatively on a regular basis.  It's really not that difficult to understand.  Krugman was 100% right, just like he usually as about most things economic.

holmantx topcommenter

Former economist turned contrarian for political purposes. a dogmatist.


the definition of a hack.

Sotiredofitall topcommenter

The issue is we keep electing the same monkeys who perpetuate the cycle of graft and corruption.  No one cares when Phil "we don't need no stinkin rules" Gramm comes out of the woodpile to back someone?  


So don't play their game. Go all cash.

holmantx topcommenter

The Fed will soon unleash another round of crack (QE3) to stave off deflation.  Wall Street's eyes will glaze over, maybe the Prez will be re-elected however, our fate is sealed.


and Krugman is an idiot and an ideologue.


Wait, Jim, you're saying we should trust ourselves?  Not have Daddy Government come in and take care of us?  Be careful Jim, you're treading ever deeper into 'conservative' waters.  


Again, you've written a piece I can't really find a fault in.  Personal responsibility goes to an even more basic level that what you've written here.  People have a responsibility to look at the numbers before they make a home purchase.  The numbers mortgage brokers were putting out there between 2002 - 2006 didn't even add up.  I passed on two home purchases in that time frame, not because I couldn't afford them, but because the numbers being presented to me didn't pass muster.


And Jim the situation your speaking of was know as Glass Stegall and it was repealed in the 90s, I mean how the hell else could we extend the four-eight  year business cycle of prosperity to 16 years.


Im sure your old enough to remember seeing those signs when you walked out of the bank and into that other thing that looked like a bank, and had a similar name to the bank  and the sign said this is not a bank, these are not insured deposits and they are investments that are subject to loss  


What isnt know to us common folk is what was JPM attempting to protecting itself from?


This loss was wrong, but what if they had been right or were they trying to offset a prior wrong. The media these days rushes to judgment and takes things at face value without digging a bit to find the story that might actually be interesting. 


Everything these days is a GET EM, or a look at this or that asshole, or see we told you group X was fucking up EVERYTHING

observist topcommenter

Clearly the solution here is to get government off the backs of the banks, and lower income taxes on job creators like Dimon, Weil, Koch, etc.


Anyone want theses crooks running the 'privatized' SocSec or anything?

ThePosterFormerlyKnownasPaul topcommenter

F#$% this,  Dimon, Weill and Sanford may say that "Well this wasn't such a great idea after all, but I seriously doubt that we will ever hear them say: "You know, this wasn't such a good idea after all, and these were really very poor decisions on my part, so I am going to give back the bonus money I was awarded some $300 million (or whatever the amount was) to the people that it really belongs to.  Such as my shareholders whose equity I squandered, or when the products I sold turned out to be worthless because we misrepresented what they really were, or because I (we) manipulated the markets for our own personal gain."


These guys are no better than buccaneers, in fact even worse as at least with a buccaneer you know what you are getting into.

Sotiredofitall topcommenter

 @holmantx Let's see now, the last time Krugman was right about something was????????

JimSX topcommenter

 @gmit If I make and sell bread boxes, and if I do OK and make some profit, then theoretically I could take my earnings and extend my personal "business cycle of prosperity" by going out to the track and putting it all on the ponies. But is that really a good thing?


 @gmit JPM's "London Whale" isn't that big a mystery. It was betting to cover enormous anticipated losses from the crap-filled Washington Mutual morgage-loan portfolio. WaMu, you'll recall--whose directors included the mayor of Dallas--was picked up for a song by JPM after it failed and was seized by the feds.


 @observist Yes, clearly that's the answer (I believe my eye's can't roll further back in my head as I type this)


Clearly the answer is to TAX the bastards.  Even better...forced wealth re-distribution to undo the wrongs they have forced onto society for the past 25 years or so.


 @Sotiredofitall As some one with a couple of graduate degrees in economics, I would have to say that Krugman is right about economics more than about any one with the possible exception of Joseph Stiglitz. That's why they gave him the Nobel Prize.  Get it?

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