Rich Man, Ordinary Man, Banker Man, Thief…

Today, in the NYTimes Business section under the headline,  Banks in Europe Face Huge Losses From Greece, we find the following interesting tidbits (emphasis added):

While bank executives and government leaders have been reluctant to acknowledge that the hundreds of billions of euros of Greek debt held by financial institutions is worth far less than its face value, they are slowly accepting the grim reality…

Hmm…isn’t the foundation of our economic system supposed to be:  you take a risk, you win or lose, you face the consequences.  Apparently, to paraphrase Leona Helmsley, that only applies to little people.

Then this:

“Once you take a write-down on Greek debt for Dexia [a major European bank], …it will be the taxpayer that pays for this.”

Whoaa! Where does that come from?  Why not the owners of the bank?  And finally:

While the question remains whether taxpayers or financial firms will make up the difference, European authorities may be moving closer to a coördinated effort on the banks.

Yep, there’s that nagging question again.  Are we (the bankers) actually going to have to lose?!  The game is supposed to prevent that…for us!  This is the sort of thing that US commentary has castigated the Japanese about for many years.  If only they would get honest and face their losses, but no, there isn’t any transparency: it’s all rigged by the government that’s in bed with the bankers…  Sound familiar?

One reader commented on our situation here at home:

“A growing number of economists, and some voices within the International Monetary Fund, argue that banks need to formally acknowledge their losses to restore their credibility.”

This is something the US banks have never really done. They still have huge numbers of non-performing mortgages on the books that are listed as assets. Of course, this has been aided and abetted by Fannie Mae, Freddie Mac, and the Fed, all in the hopes that a housing recovery that never materialized would solve the problem.

Ordinary people have to acknowledge their losses, lose their homes, forego college for their children, while banks pretend ‘face value’ is market value and squeeze the 95% of the population not in on the game to pay the difference.

Live, from Wall Street!

I took a little walk down to Wall Street, USA at lunch just now.  I actually went into Federal Hall for the first time.  (That’s George Washington on the steps, the Stock Exchange in the background.)  I hadn’t known that the building was erected some 40 years after GW’s first innaugaral.  The original structure wasn’t so imposing.

The scene there was frenetic.  Of course, tourists are always in abundance in NYC these days, what with the dollar being so low, but the television cameras were out in force.  I had to fight my way past a crowd gathered to here the latest pronouncement from the Oracle…er, update from the trading floor.  An historic time, this, and liable to more deeply change the country than 9/11 I would say.  That threat came from without – now, as the saying goes, the enemy is us.

David Brooks, with his finger in his ear to take the nation’s pulse, is fit to be tied as he decries the Republican “nihilists.”  He can’t believe that they are acting as though it is 1984 and the “enemy” is socialism or “Mondale liberalism.”  (It’s always 1984 somewhere!) Well, soi disant conservatives on the right tend to be out of touch with history, Dave.  They yearn for the golden days of 1884!  The Republican elephant is splintering into its constituent parts:  Palin-ite religious paleo-conservatives; Wall Street money men; and strict captialist libertarians, similar to what were called in the 19th century, horrorible to say,…liberals!

The hub hub makes me think of the last days of the ancien regime.  Hope it doesn’t get to that!  History is happening right before me – real people, milling around, wondering what’s going on – hanging on the words of the suits emerging from the temples of Mammon.  Surely, many of them must be thinking, “All those words of the politicians…what do they mean?  This whole system, it’s just made of people!  It’s not rocket science, it’s not the weather.  Some people wanted to get very rich in a very easy way, and now they’re terrified.  Of course they want us to bail them out.”

Schadenfreude Anyone?

It’s hard to restrain oneself from chuckling with glee at the ci devant masters of the universe at Bear Stearns as they contemplate their fortunes turned to dust in the twinkling of an eye. Surely the ghost of J. P. Morgan is heaving his paunch and laughing heartily somewhere, up there? down below? Still, at the banking firm of Bear Stearns – should we just call it BS? – where the culture was to buy the stock of the padrone, quite a few of very ordinary folks will go down with the ship. Secretaries, mail-room workers, lower level admin and research staff, etc. In terms of percent of the people affected, they will be the majority, and they are royally screwed.

In a crisis, they say, you see what people are made of, and so too, a system. Without trust, there can be no business, and trust is dwindling a bit these days. “Come to think of it, just how were those people making all that money?” Why, when you examine the entire business, it does seem a little like a shell game, a Ponzi scheme, don’t it?

It’s all fine as long as the stock is going up. If you aren’t getting rich, it’s your fault, your genes, your backbone, your sorry moral state. The elect and the masters are chosen by The Market, and the words of the Lord are written in the annual reports (doctored, it’s true, but every deity needs an interpretor, a prophet). Now, once again, we hear the words of Captain Renault from the film, Casablanca: “I’m shocked, shocked to find that gambling is going on in here!”

Oh well, damn the torpedoes, full speed ahead and socialize the risk, privatize the profits! See the recent NY Times editorial on this that sums it up well.

Meanwhile, consider this snippet from a day or so ago in an article about the collapse of Bear:

“In this room are people who have built this firm and lost a lot, our fortunes,” one Bear executive said to Mr. Dimon with anger in his voice. “What will you do to make us whole?”

Why the hell should anyone care about making this troglodyte “whole?”