Social Justice on Wall Street

by Mark Lovett on November 24, 2008

I’m supposed to be on vacation at the moment, taking a few days off with friends exploring the countryside surrounding Santa Ynez before returning home to enjoy Thanksgiving.

It’s beautiful this time of year, with wisps of white clouds accenting the blue sky and the crisp fall air greeting you each morning.  It’s also nice when there are relatively few travelers on the road and the pace of life is unhurried.

The Wall Street Journal

But rather than celebrating my good fortune, I’m snarling at The Wall Street Journal.  Suddenly my coffee is acidic, my eggs are cold and I’m fit to be tied while reading one of the front page articles: Anatomy of the Morgan Stanley Panic.

“Trading records reviewed by The Wall Street Journal now provide a partial answer.  It turns out that some of the biggest names on Wall Street – Merrill Lynch & Co., Citigroup Inc., Deutsche Bank and UBS AG – were placing large bets against Morgan Stanley, the records indicate.  They did so using complicated financial instruments called credit-default swaps, a form of insurance against losses on loans and bonds.

“A close examination by the Journal of that trading also reveals that the swaps played a critical role in magnifying bearish sentiment about Morgan Stanley, in turn prompting traders to bet against the firm’s stock by selling it short.  The interplay between swaps trading and short selling accelerated the firm’s downward spiral.”

I stop and reread the passage.  While hundreds of billions were being flushed down the toilet by the icons of Wall Street, they were simultaneously placing bets, in hopes of making a big profit, that one of their own was about to go belly up.  Reflecting on the fact that millions in the world are starving, millions more are in refuge camps, and the planet is under siege from the mounting effects of climate change, I began to wonder:

Are these executives adding one single ounce of value to humanity?

Morgan Stanley Financial Services

More than ever we need the smartest minds to be focused on the grave challenges that threaten our global society, yet these folks were playing financial games that bordered on monetary masturbation.

Adding Fuel to the Fire

If you saw this edition of The Wall Street Journal you knew that I began reading below the fold, so when I flipped the paper over and read the headline, U.S. Agrees to Rescue Struggling Citigroup, you could see why my reaction was not one of calm and graceful understanding.

CitiGroup Financial Services

Not only had the federal government agreed to pump in $20 billion in new capital to this failing firm, they had also agreed to guarantee $306 billion in toxic assets.  Maybe such numbers are rounding errors to the financial elite, but I’m guessing that for most of us such statistics are mind-numbing.

I’m convinced that in the future, some industrious accountant with a sharp pencil will tally the price of this disastrous escapade, and when they do, it will be counted in the trillions, not billions.

What we’re experiencing with regard to the collapse of this country’s financial market is the realization that there doesn’t seem to be an end in sight, and our government simply continues to bail out one firm after another, with apparently no ramification to those who caused this mess in the first place.

The Price They Should Pay

The idea then came to me that all of the executives who played a part in this fiasco should pay for their greed.  My first thought was that each of these corporate charlatans should give back all the bonus money they earned during the past five years.  That thought quickly expanded as I realized they should also give back the salary they earned during this time, followed by the notion that they needed to cough up all their stock options and any money made from exercising those options.

But much of these ill-gotten gains have already been spent, and so the final solution became clear.

  • Clean out their bank accounts of all cash assets
  • Liquidate all their stock and bond holdings
  • Confiscate any collections, such as art, wine, coins or watches
  • Take back any jewelry, especially the diamond bracelets and earrings
  • Repossess their primary residence, like the posh condo in Manhattan
  • Repossess their secondary residence, like the house in the country
  • Repossess their automobiles, boats, planes, bicycles, mopeds and skateboards
Hampton Beach House

The Hampton Beach House

I don’t care if they end up at the soup kitchen or have to live in public housing and use public transportation to get them to and from the unemployment office or job interviews.

Can you tell I’m pissed off?  If I steal someone’s purse you can bet I’ll be in jail rather quickly and will end up in court explaining my actions to a judge.  But these scurrilous vagabonds have stolen billions and wasted trillions more, yet they appear to have gotten away with it.

The pundits on television don’t seem to care as they pontificate on the point that these financial institutions are too big to fail, and that the government has no choice but to bail them out.  To them it’s just a case of better luck next time.  While I can somehow tolerate some of that logic, I can’t in all good conscience agree that the bandits in question should ride off into the sunset with our money.

The Benefits of Ranting

Do I think my suggested acts of retribution are possible, or plausible, or advisable?  The jury is still out on that one, but what I do know is that it will take more than a few sips of wine this afternoon to calm me down, as this episode in our country’s history is something that defies comprehension.  The extent of the greed, the overwhelming stupidity, the lack of concern for anyone else is hard for me to grasp.

Can we prevent such acts from occurring again, or will history repeat itself?

{ 9 comments… read them below or add one }

Jeremy Parzen November 30, 2008 at 8:53 am

Global Patriot, thanks so much for stopping by Do Bianchi and the comment. I hope you had a great holiday and am being enlightened by reading your thoughts on the current financial crisis. Great blog!

Blog on, Jeremy

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Global Patriot November 30, 2008 at 9:51 pm

Thanks for the kind words Jeremy, the ability to blog one’s thoughts is quite a gift!

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Global Patriot November 29, 2008 at 9:53 pm

Thanks for the words of support!

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bethany November 26, 2008 at 12:05 am

I too have been so angry with this catastrophic downfall over the last couple of months. I used to work in the mortgage industry and know all about the subprime loans and the greedy mortgage brokers (my bosses) that would pry, lie and sell to americans. I was told that certain information like the interest rate being given was a variable and not a fixed rate and that the suggested payments were not even paying all the interest accrued…well that was information I Should Not DISCLOSE!

Those guys on wall street knew exactly what they were doing and they need to Pay For It, not be bailed out! Unfortunately, the corrupt are leading the corrupt… they are all in it together! We need to stand up and say enough is enough! Thank you for doing your part… and writing this. Enjoy your vaca and the sun, tis freezing in london :)

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Global Patriot November 26, 2008 at 9:53 pm

Bethany, you obviously know more than most. I listened to a radio interview some months ago in which the mortgage broker echoed your comments. It was a period of insanity whereby agents were told to do most anything, just to make the numbers.

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Meryl Steinberg (meryl333) November 25, 2008 at 1:19 pm

Mark, Thank you for ranting on my behalf. I feel the same way–though I’d leave them their primary residence. Let’s not get nasty. (cough) This morning I tweeted from ODE magazine article re: Adam Smith. Apparently, dear Adam believed the benefits of free market should accrue not just to individuals but to society as a whole. See ODE article: http://budurl.com/fc4c . Go figure. Those free market folks keep leaving that part out.

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Global Patriot November 25, 2008 at 9:55 pm

Meryl, I did get a bit extreme on the take-aways, it’s just that I’ve seen some of the bonus numbers over the past few years and it’s not fair that average folks are in foreclosure while those responsible still enjoy the good life in their posh upper east side digs.

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Paul @ Green Pepper November 25, 2008 at 8:16 am

A great read, Mark. I couldn’t agree more. Although I lack your in-depth knowledge and understanding of the economic situation, I do believe the “executives who played a part in this fiasco” should be held to account. Mind you, it just sounds like capitalism to me! Thanks for an informative post. Enjoy the rest of your vacation (maybe leave off reading the WSJ ’til you get back).

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Global Patriot November 25, 2008 at 9:57 pm

Paul, thanks for the comment. It wasn’t my intent to read the WSJ while on vacation, but it was free with breakfast so I grabbed one – too bad it gave me indigestion.

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