Masters of the Universe whine for all to hear

It was only a matter of time before the crying game appeared

The New York Times reports that

…there is a lot of wincing [among Wall Streeters] about the [financial] profession's catastrophic loss of cultural cachet. Wall Street has become a target of populist rage, raw material for talk-show tirades, the occasional street protest and a lot of punch lines.

'Shit happens' even to the chosen few strong enough to push the world over the ledge. Of course, the culpable can manage the situation somewhat by relying upon denial:

Financiers tell their not-for-attribution account of the mortgage crisis like this: Americans undersaved and overspent for decades, relying on rising property values to bankroll their lifestyles. But nobody on Wall Street forced United States homeowners to take out loans on houses they couldn't afford, or refinance mortgages to spend money on cars they shouldn't have bought.

The esoteric securities underneath the current mess are, to the people who invented and marketed them, analogous to pharmaceutical drugs. Used correctly, they can enhance your life. Abused, they are lethal.

Some points:

First, while it may be true that the banksters and their kin never forced common Americans to undersave, overspend and take out loans they could not afford, as the Times article tells its readers, it is equally true that no one forced the banksters to loan money to individuals and families that could not repay these debts. Why did they do this? What motivated them to take make these dubious loans? Where, for that matter, was the system-wide commitment to due diligence when these loan-making practices were common?

Likewise, no one forced the banksters to securitize these dangerous loans, to trust the judgments made by the credit ratings agencies or to rely upon the politically compromised regulatory agencies which supervised the financial sector. In the end, not only are the banksters responsible for their deeds, it is evident they adopted these practices because of the incentives they faced and the goals they pursued. The opportunities for profit-taking sat before them and the banksters did not pass over these chances to make money. Finally, it is worth mentioning that the banksters as a whole and economic sector they occupy had the wherewithal and the motives to identify the systemic risks that were conspicuous features of these loan-making and loan-manipulation practices. Yet they refused to heed the warnings entailed by this available knowledge. Why? I ask because their refusal, when considered in hindsight, appears to be a form of collective insanity. The answer is obvious: They refused to take sufficient care because they wanted more than anything else to take massive profits and incomes from their activities.

In their superficial rationalizations the banksters stand tall with the pimps and drug pushers of the world, groups with whom they share a sense of ethical integrity and justice. Tony Soprano, for instance, would merely call the loan-takers "degenerate gamblers" or "stupid-greedy-fucks." The banksters, we have learned, snidely point to their myopia and naïveté. Both the gangsters and banksters feel superior to their victims and both wish to profit off of human frailty and myopia. I believe they receive the recognition they have earned.

But not every bankster is afflicted by the moral idiocy depicted above. Some do see the problem which arises when one denies the obvious and refuses to accept the responsibility entailed by one's humanity:

"People say 'Well, the Fed is to blame because there was all this loose money,'" said Luis E. Rinaldini, a former partner at the investment banking firm Lazard Frères, now at the merchant bank Groton Partners. "But guys who run banks are paid to be cautious when there's loose money around."

"I mean, if you had a bus driver who went 100 miles an hour on an icy road, you'd think he was crazy," he adds. "But if his boss said, 'It's our policy to drive faster as the roads get icier,' you wouldn't be surprised if the boss ended up in jail."

Will many of the blameworthy banksters spend their days in jail? Most likely will not.

Second, one might wonder if those banksters prone to bouts of self-pity also suffer from a loss of memory? It seems that they do since the relatively autonomous finance capital which first emerged in the 1970s undoubtedly fomented these recent systemic crises: The Latin American debt crisis of the late 1970s and early 1980s; the Savings and Loan crisis of the late 1980s; the 1987 Black Monday Stock Market Crash; and the Long-Term Capital Management crisis of the late 1990s. Each event foreshadowed the disaster we now confront. Each was dangerous. So, given the magnitude of the current crisis and the role Wall Street had in generating the crisis, outsiders like myself cannot help but to wonder what the banksters learned from the earlier crises? Anything? Or, did they fixate on the well-founded belief that Washington would eventually throw a golden lifeline to the reckless but well-placed financial capitalists?

Third, who actually abused the esoteric securities which are known to be the major proximate cause of the current crisis? The hapless and now ruined spendthrifts who took on debt they could not afford and did not completely understand? Or, perhaps, did the abuse issue from the overcompensated, overindulged and overvalued finance capitalists who allegedly knew what they were doing? I would lay the majority of the blame on those individuals and institutions with the means and the motives to prudently manage the risks given along with the use of these financial tools. To be sure, the federal government also shares in this blame, especially for enabling Wall Street to drag the world into this crisis. After all, with power comes responsibility. And most of the relevant powers responsible for the crisis can be located in Washington, DC and on Wall Street.

Bluntly put: These powers broke the economy, they own the subsequent crisis.

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