Now we are getting somewhere!
The excrement has finally hit the fan!
We are victims of our collective naiveté, gullibility and willingness to off load responsibility for our future. Conservative financial thinkers have long lauded the trickle down theory: if the top people get filthy rich the rest of us will share in the wealth the way the pariahs of ancient Rome did (wild dogs at the garbage dumps).
We believed this. So we put up with ridiculous schemes and bought securities that couldn’t be explained and weren’t based on anything of real value. You see it wasn’t just Wall Street greed that led to the mess we are in it was Main Street greed as well.
So what are we to do? I think and hope it’s simple — stop investing in stuff you don’t understand (Peter Lynch said it best years ago) stop believing in Wall Street magic and stop looking for a quick or extra special buck.
All of us need to face reality — everyday and in every aspect of our lives.
I watched the News Hour with Jim Lehrer last night. He had two ‘financial advisers’ on the show. They were in a panic because the trite ‘wisdom’ they dole out on a regular basis didn’t sound good to them anymore. Here is what I wrote in an email to the show:
“After listening to four very reasonable politicians (there were 4 members of Congress on earlier), I was stunned tonight to hear the panic stricken ‘advisers” speak to the issues facing individuals during our current crisis.
One said he hesitated to write a column about the wisdom of long term investments in the market. The other warned against putting money in the market unless you don’t need it for ten or fifteen years.
The primary concern of individual investors aught to be the quality of what they buy for investment purposes. The garbage masquerading as blue chip securities created by Wall Street is at the root cause of the crisis. Investors need to know what they are buying and need to be working with conservative, honest and trust worthy institutions.
The last thing we need now is to listen to advisers who panic when their tired ‘wisdom’ fails to comfort even themselves.”
The investment industry has for a long time been populated by ‘experts’ who become so by taking a 3 week course in how to sell securities to those even more uninformed than themselves. The industry includes smart people who invent securities based on an offset from vague and almost indescribable assets. Most successful Wall Street workers — those who make $500K and up in a bad year — don’t make investments they make bets. Listen to them and you will hear them say so themselves.
Now we have a treasury Secretary who was CEO of Goldman Sacks, an engine of strange investments if there ever was one. He wants to bail his buddies out. ‘No!’ was the answer and I thank our representative form of government for that. (One Congressman said his constituents were mixed on the issue — some said no while others said hell no!)
While I don’t oppose all government help on this crisis I want it to be applied where it will do the most good. None of the derivatives, concocted by Wall Street to attract money for worthless assets, should be bought by the government. Rather an agency designed to keep people in their homes should be set up. But not everyone can stay in the home they recently bought because some folks were foolish enough to spent way above their ability to pay. Greed and foolishness has been in evidence at every end of the economic spectrum and it must not be encouraged any longer. Greed is not good, not matter how many times the “Masters of the Universe” say it is.
What do you think? Am I just letting off steam? Or are we finally getting somewhere?