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R. Emmett Tyrrell
R. Emmett Tyrrell Jr.
31 Jul 2014
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Wall Street Wizards No More

Comment

WASHINGTON — The phenomenon of opulent Wall Street investment wizards contributing in large numbers to the Democratic Party, often to the left wing of the Democratic Party, struck me, until recent years, as perverse to the utmost. During the 2008 election cycle, 60 percent of the donations made by employees of the top Wall Street firms went to Democrats. Surely, these Wall Street donors had to realize that the left wing of the Democratic Party, which dominates the party, is utterly ignorant of the economic system that allowed the Wall Streeters their opulence. Yet as the imbecility of Citigroup and AIG and all the rest is revealed, it has become obvious that those who write checks for Madame Pelosi and for the enthusiasms of Al Gore actually know very little about free market capitalism. If they did, they would have realized that in capitalism, the bubble always bursts and the chain letter always runs out of suckers.

Reviewing the fall of these impossibly leveraged investment firms, it is apparent that their leading executives had no respect for prudent risk management or for prudence in general. Lending standards were foreign to them. Their laxness would have been spotted easily in decades past by prudent lenders. Yet for several decades now, standards of all sorts have been wasting away, for instance, entertainment standards, intellectual standards and investment standards. Where there was once Ella Fitzgerald there is now Britney Spears. Russell Kirk has been replaced by Arianna Huffington. Walter Wriston gives way to Robert Rubin. Obviously, when investment standards are abused, the consequences are more immediate than in the realms of entertainment and intellect. Financial loss is real and cannot be denied for long.

From our vantage point in early 2009, we can see that critics of Alan Greenspan were right when they said that he lowered interest rates too much between 2001 and 2004.

But what about the products that the Wall Street wizards were selling? They were called — in hushed tones of awe — "complex derivatives." Actually, they were sausages stuffed with junk loans, mediocre loans, good loans and sufficient spice to sucker the credulous. These sausages were sold all over the world, and every time a transaction was made, those in on the transaction made money, even the vegetarians, even the economic ignoramuses. It was a kind of gigantic chain letter. Government regulators did not take heed. The politicians did not take heed. Those investment bankers who did and who spoke out were ignored.

As one of the now-discredited wizards, former CEO of Citigroup Chuck Prince, put it in an interview with the Financial Times: "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you got to get up and dance. We're still dancing." He said that in July 2007. He was off the dance floor by early November. There was a time when such insouciance about excess "liquidity" would be unthinkable for a responsible Wall Street banker. Yet as I say, in recent years there have not been a lot of responsible officers in the Wall Street investment houses, and those who were responsible were not listened to.

On Wall Street, in London, and wherever else the madness took hold, huge salaries and bonuses were heaved around, even after the bubble had burst and the chain letter was seen for what it was. Now my worry is that the rogues of Wall Street will be replaced by the rogues of Washington. A fundamental problem of our time is a widespread insouciance to prudent standards. Such standards would have restrained the opportunists who danced when they should have practiced due diligence. Now let us hope the politicians will return to prudent standards in fashioning their resolution of the financial crisis. Thus far, there is little reason for optimism.

R. Emmett Tyrrell Jr. is founder and editor-in-chief of The American Spectator and an adjunct scholar at the Hudson Institute. To find out more about R. Emmett Tyrrell Jr. and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

COPYRIGHT 2009 CREATORS SYNDICATE INC.



Comments

3 Comments | Post Comment
The 'Wizard Fat Cats of Wall Street', the 'Politicians on all levels', 'Freddie, Fannie, AIG, and
anyone else taking Taxpayers money that doesn't belong to them certainly aren't wizards.
Taxpayers know these people are worse criminals than ones sitting in State Prisons, but
yet, we're letting them continue stealing more and more money we don't have! Since 1977,
Lack of Experience and ignorance has put America further into the pockets of foreign countries!
Wonder what's going to happen when everyone figures out that the only 'change' is just from one
seat to another?
Too bad 'Fair Tax' to include property Taxes' and 'Voting Laws' weren't changed a few years back!
"If you don't work, lie around having illegitimates by every Tom, Dick, and Harry, do drugs, get HIV/AIDS,
live off social and welfare programs, you certainly aren't doing anything constructive for America! You're only creating 'Terrorism on American Soil!"
Maybe the political types need to watch Cop Shows, Americas Most Wanted and the local TV news to see
what's happening on American streets by these illegitimates!

Bankruptcy is the only choice for these 'greedy, non-caring, lack of common
knowledge, high-dollar fat cats' as without re-organizing, backing up and
thinking for a change, their disasters will put America into Bankruptcy! Then what
happens to America's future?

Government, on all levels, must run like a private business, eliminating jobs,
cutting salaries and freebies, or our children won't have a future!

Bailouts shouldn't be an option for Freddie, Fannie, AIG, Big 3 or anyone else
taking Taxpayers' money! AIG, two weeks after it received $85 billion, senior
executives took a $440,000.00 resort trip. CEO is now taking a $1 a year salary!
Yeah right? He insists on providing $400 million in "retention" bonuses for 2,000
in upper management. On average, that's a $200,000.00 present! Come to think
of it, their lack of common knowledge, greed, and I don't care attitude, helped
promote Nafta and Cafta which wound up eliminating jobs! Even to a dummy,
this means "time to cut production on automobiles, stop building houses, as
people no longer have jobs to pay for anything! Doesn't take a rocket scientist to
figure this out!

Taxpayers will give politicians, CEOS, and other fat cats a couple choices "A
one-way ticket across the ocean with only the clothes on their backs, as their
bank accounts, homes, and anything else of value belongs to Taxpayers and
must be used to pay off trillions of dollars of debt they're sticking Taxpayers
with!" OR, a recent cartoon, put them in state jails (not federal country clubs) and
throw away the keys!

While I'm on a roll,"Why would these high-dollar criminals think they're Royalty?"
You can't make a 'Silk Purse' from a 'Pig's Ear'! They're not as good as the ones
the court system, puts in state jails, daily, for robberies, forgeries, and fraud!
Comment: #1
Posted by: Shirley deLong
Thu Feb 12, 2009 3:19 PM
Sir;... Who are you to call the democrats utterly ignorant of anything??? What make you think it is possible for anyone to negotiate the world of Capitalism of which America is the center without knowing something of it... Ignorance is as hard to come by as expertise.... Mr. Greenspan said his idea of the market, held for forty years was proved wrong...He never said he was wrong.... Does that mean he is ignorant??? How about all those who ran financial institutions that would be insolvant at this point if the government was not bankrolling them???Were they ignorant???I will agree with you if you say there is plenty of ignorance to go around... Essentially, anyone who buys into capitalism and thinks it can produce rich people without producing many more poor is ignorant... You are ignorant, and much more so than the democrats, or even your average republicans...Why did rich young finainciers support the democrats????.What you were seeing was the natural reaction to outlaw capitalism on the one hand, -recognition that regulation was healthy and necessary; and the desire to buy influence in government on the other hand... Sir; it was experts, wizards, and farsees who led this country full tilt into this depression... All of government is a conduit of wealth, making wealth possible for the wealthy; keeping it unassailable from the poor... The government is a path to personal wealth, and a retirement home for millionaires on the right and the left... Certainly the poor should have their own government... If the land was governed by the poor for the poor, it is certain it would better governed... But then, the ability of the rich to be rich, and the freedom of the rich to buy government would have to be curtailed... Are you ready for that??? Could you take a Supreme Court that was not all multimillionaires??? People are not made intelligent any more than loving by wealth... Money makes people wealthy and nothing more... Government is a path to power, and anyone looking for power is looking for wealth, and vice versa... The problem with the whole bunch of them is not brains, but heart, except where brains are mede useless by ideology... Ideology, wealth, and power wreck the natural ability of people to love... Perhaps it sounds stupid to you, but love is not laying off worn out people, and love isn't putting people out of their houses... Love may not be smart, but it doesn't hurt.... Thanks...Sweeney
Comment: #2
Posted by: James A, Sweeney
Thu Feb 12, 2009 6:21 PM
Re: Shirley deLong;... Ma'am, ..We have plenty of money.... All the stuff is, is green paper with dead presidents and big numbers on it.... It is sort of a problem, that the more they print to fund their economy, the more all the rest becomes worthless... If we had democracy we would not vote to support that nest of thieves... We have given them the health, the wealth, and the future of this nation because it was the price of our day to day existence... Government should have given us some control over our affairs, and over our economy...Some way could have been found to cycle wealth back to the people where it could do some good... Giving it to the rich is what lack of democracy has led to, and we will not get our wealth back until we get democracy... Now; I have read your words, and perhaps the last thing you want out of life is to see me with a vote equal to your own... It is such jealousy of political power, and the willingness to deny people their rights by the vote that let a class of thieves take everything as their own of any value in this society... And when the bottom falls out of the market, they can convince government to feed the top; and over the objection of the whole population...Government did what they thought best, and not what the people were telling them to do..Does that seem right???. The poor have enough sense to want to see the rich fall; because we would all be better off with new hands picking up the pieces... We need democracy in this land, and we cannot have that without equality...I will concede to you the right to govern yourself, and keep to yourself in your own affairs if you will do the same for me... Then we can use government to protect ourselves from these enemies domestic and abroad who will put Keep Off signs all over America and the Government... If we can't get democracy, we are doomed to slavery or extinction...Thanks...Sweeney
Comment: #3
Posted by: James A, Sweeney
Thu Feb 12, 2009 6:44 PM
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