Wednesday, September 24, 2008

It's the Economy.....

I feel like I should write something about the economic disaster unfolding in Hickey Freeman suits all along the Eastern seaboard. Yesterday, I sat on a playground wondering what the Acela looked like and if it was filled with investment bankers and other busybodies hurtling between Washington and New York. That thought is about as sophisticated as my thinking on the mess has gotten. Because I don't understand it. I don't understand a lick of it and I haven't read that much about it because it makes me feel like I do when I think about long division. Because I don't understand how lobbyist can be lobbying for accounting rules to be suspended so investment banks won't take further losses so it would be like the whole thing didn't happen. I don't get how there are people who argue that capping executive pay will stifle hard work. I don't see how any of these people can say with a straight face that government shouldn't regulate their business but it must save their bespoke shirts when all their bets went bad. I mean, I can see that if someone doesn't save the banking industry the reprocussions across the global economy will be severe. I think I get that. But I don't get why these people can't understand that at a certain point enough is enough and rules are required and a little humility is called for, nevermind paying back their $50 million bonuses. But that's all I got.

2 comments:

roni said...

Robin, check out this essay in the current issue of The New Yorker. In one page, James Surowiecki summarizes how investment banks are run and *why* they got into this $700 billion mess. The essay doesn't get into the "how" (e.g., subprime mortgage scams), but it explains increasingly reckless investment bank culture in response to Wall Street's demands for increased profitability.

http://www.newyorker.com/talk/financial/2008/09/29/080929ta_talk_surowiecki

Robin Aronson said...

Yes! I read that! I thought I understood most of it, but now I can't remember a thing from it except the bit about how going public was really bad for banks and then something about like having $1 on hand for every $30 invested (Merryl Lynch's brilliant math). I have a book called Free Lunch by David Cay Johnston about bank deregulation that I really must read.