Entitlement And Markets

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Ann Woolner measures the pulse of the masses perfectly with her piece "Sue Them, Jail Them, Make Them Pay for Meltdown" in Bloomberg today. Her commentary sketches everything that is wrong with the last 15 years of the American Capitalist Experiment, and, like a Pokemon episode* to a photosensitive epileptic, leaves the unwashed reader twitching with anti-capitalist convulsions.

As it stands, the rest of us will be paying much money over a long time for the greed and bad judgment of those who melted down the economy.
Hundreds of billions of taxpayer dollars are propping up firms that a relative few money lenders and Wall Street wizards ruined.
If that weren't enough, the crisis is shrinking the money that Americans diligently socked away for retirement, down payments on first homes, college for the kids or this winter's heating bill. We might as well have opened our windows and tossed out cash.
Beyond crimping living standards around the globe, the crumbling of the U.S. financial system has prompted action radical for a nation devoted to free enterprise. However necessary, it's nothing short of astounding that the U.S. government essentially nationalized the largest insurance company in the country.

* Warning: May cause seizures in epileptics or Lehman employees.
More after the jump.


The degree to which this mirrors the American version of "return entitlement" boggles the mind. Last I checked "greed and bad judgment" were not illegal. Moreover, they are just a 15% jump towards the "good judgment line" away from receiving hero-like status in this culture.
The oft celebrated Warren Buffet is a greedy bastard. So is Bill Gates. That's not up for debate. It is only the "judgment" element of Ms. Woolner's discourse that makes any difference. Considering the rather small number of asset managers who actually beat the broader market, criminalizing bad investment judgement seems like a poor idea to me. But I might be in the minority here. Still, no one was complaining when Lehman returned quarter after quarter of record earnings in 2007.
No one is to blame for your poorly invested and badly diversified retirement losses other than you. If you didn't know that you were getting 8%+ returns in the market because there was some risk of catastrophic loss involved, then you shouldn't have been there in the first place. "...a relative few money lenders and Wall Street wizards..." did not ruin the economy. All of the market participants did with their blind belief that housing prices could only go up. That oil would remain cheap forever. That sovereigns might never lose their taste for subsidizing conspicuous consumption.
I think that the Woolner's and Cox's of the world have it backwards. We shouldn't be restricting short sellers. We should give profits from short sales and puts preferential tax treatment.
The idiot who decided that owning a home was the American Dream actualized to such an extent, and the desire for which was honed to such a keen edge, that we were going to allow people to put down a mere 3% if they joined a government home ownership program is the nimrod that Woolner should be jumping on. (Three guesses who scuttled risk based pricing here).
The corrupt, nepotistic emperor who turned Freddie and Fannie into a cushy slot to drop big campaign contributors and political operatives into as a reward for a job well done should attract Woolner's ire.
You are not entitled to an affordable MacMansion, cheap insurance on a hurricane scarred floodplain, 9% annual returns on your index fund for 40 years in a row or equities that go up but never come down, and as a Bloomberg contributor you really should know this.
Grow up.

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You can read the Jamie Dimon "Don't gloat about how bad Goldman is. Did you hear me? Don't gloat about how BAD GOLDMAN IS. The fact that GOLDMAN is BAD is of no interest to our clients. Or the press. Don't leak this to the press!" memo two ways. One is, y'know, what it sounds like: Dimon gets to score some easy/meta points by spreading it around that his business practices are so superior that he doesn't even need to spread it around that his business practices are superior. The other is that making money off of clients isn't something invented at Goldman Sachs and anyone at JPMorgan who throws stones is likely to be clonked on the forehead by a ricochet. (Or possibly by a deranged fictional whistleblower!*) The latter interpretation is probably right for James Gorman's more full-throated defense of Goldman because whoops: