I wanted to save this 'white paper' for a weekend when it can be isolated since it's very well written and touches on countless themes we've discussed over the past 3 years on FMMF. Everything from asymmetric corporate compensation (heads you win, tails you still win!) [Sep 27, 2008: Heads We Win, Tails We Win] [Oct 30, 2007: You're Fired! Now Here is $160M to Help Ease the Pain] supported by a crony board of director system so fortress like Carl Icahn has a hard time penetrating it, to the disaster that is FanFredron [Sep 7, 2008: Bailout Nation Continues - Fannie/Freddie Now Owned by You], to 'financial innovation' [Sep 10, 2009: Goldman Sachs CEO - "Ok I Admit It, Some of our Financial Innovations are Socially Useless"] by hedge funds masking as "banks" who are happy to gamble on anything that could generate profit knowing the "taxpayer/Fed" always is an implied backstop, to government whose only care in public policy is how to win the next re-election, to our lovely central bank and all the "good it does", to a culture where a celebrated Secretary Treasury works tirelessly to repeal Glass-Steagall & then immediately resigns to take on a decade long reign at eventual ward of the state Citigroup (collecting $100M along the way) [Jun 26, 2009: Bloomberg - Paul Volcker Marginalized; Major Push Back on Curbing Excess. Our Life of Financial Oligarchy Does not Change], to the fraud that America is still about 'capitalism' - rather than corporate socialism (Cramerica - for the corporation, by the corporation) [Mar 19, 2010: Two Corporations Begin Run for Congress. Yes, I am Serious].... the whole works summarized nicely in 1 spot.
If you want a good overview of how we got here and a bevy of potential solutions (not that they will stand a chance of happening) I encourage this weekend read: Gambling with Other People's Money: How Perverted Incentives Caused the Financial Crisis
Author: Russell Roberts is Professor of Economics at George Mason University, the J. Fish and Lillian F. Smith Distinguished Scholar at the Mercatus Center, and a research fellow at Stanford University's Hoover Institution.
I'll cut and paste the executive summary and his proposed solutions below just to give a flavor of the piece.
Friday, June 18, 2010
Weekend Read: Gambling with Other People's Money
Best Of FMMF
- 1: Warren Buffet Piles on Europe
- 2: [Video] Jim Chanos Returns from Europe, Even More Bearish on China
- 3: A Chart to Open Our Eyes - Staggering Changes by Multinationals in Employment Behavior 00s vs 90s
- 4: Futures Blasted on Dexia Woes... and Poor Preliminary China Data
- 5: Market Working to Worst Thanksgiving Since 1932
- 6: Et Tu, German Bonds? Poor Auction Raises Eyebrows