Not So Sensible
Apr. 25th, 2010 09:37 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
walkitoutI dearly want to love Frank Rich. He's funny. He has a way with words. Our values have substantial overlap. And then he says stuff like this:
http://www.nytimes.com/2010/04/25/opinion/25rich.html
Specifically,
“At least in an actual casino, the damage is contained to gamblers,” wrote the financial journalist Roger Lowenstein in The Times Magazine last month.
Did you _have_ to pull a Stupid Quote like that? Really, Mr. Rich? You were on _such_ a roll: you delineated clearly the sea change of the last week in terms of financial reform and whether it might actually happen. Along with the FT article I blogged about earlier, you pointed out that some of these innovations "have no redeeming social value". If you are going to use gambling as your metaphor (and it is definitely the right one to use), then _why_ would you want to hamstring it before it gets out of the gate? To mix, er, well, never mind.
People who gamble in actual casinos frequently are doing so with money that was supposed to pay the rent, buy food for the kids, make a payment on the credit card, whatever. In the small town of Mayberry that I used to live in (not its actual name) in southern New Hampshire, one of the local school teachers took to bank robbery to fund her gambling problem. Really. I'm not making this up.
If things like synthetic CDOs and other exotic financial instruments are really just gambling, are really just betting -- they don't transfer risk, they create it out of, well, whatever synthetic CDOS are made out of -- then let's be honest about why that's bad. That's bad because a lot of the time, gamblers cannot afford to lose the money they've put on the table. And that's _exactly_ what's wrong with banks participating in this nonsense. They lose a bet. Their capital structure goes way past creaky and into total collapse and the next thing that happens is some jackass pulls a piece of scratch paper out of his back pocket and says give us a whole lot of money and all the power imaginable. And we have to say yes, because the alternative is entirely terrifying.
Let's not do that again.
But unfortunately, Mr. Rich follows up his disabled metaphor with a distraction in which he compares what Magnetar did to betting against the American Dream.
It might take us a while yet to get a handle on what happened and what we can do to prevent it from happening again.
http://www.nytimes.com/2010/04/25/opinion/25rich.html
Specifically,
“At least in an actual casino, the damage is contained to gamblers,” wrote the financial journalist Roger Lowenstein in The Times Magazine last month.
Did you _have_ to pull a Stupid Quote like that? Really, Mr. Rich? You were on _such_ a roll: you delineated clearly the sea change of the last week in terms of financial reform and whether it might actually happen. Along with the FT article I blogged about earlier, you pointed out that some of these innovations "have no redeeming social value". If you are going to use gambling as your metaphor (and it is definitely the right one to use), then _why_ would you want to hamstring it before it gets out of the gate? To mix, er, well, never mind.
People who gamble in actual casinos frequently are doing so with money that was supposed to pay the rent, buy food for the kids, make a payment on the credit card, whatever. In the small town of Mayberry that I used to live in (not its actual name) in southern New Hampshire, one of the local school teachers took to bank robbery to fund her gambling problem. Really. I'm not making this up.
If things like synthetic CDOs and other exotic financial instruments are really just gambling, are really just betting -- they don't transfer risk, they create it out of, well, whatever synthetic CDOS are made out of -- then let's be honest about why that's bad. That's bad because a lot of the time, gamblers cannot afford to lose the money they've put on the table. And that's _exactly_ what's wrong with banks participating in this nonsense. They lose a bet. Their capital structure goes way past creaky and into total collapse and the next thing that happens is some jackass pulls a piece of scratch paper out of his back pocket and says give us a whole lot of money and all the power imaginable. And we have to say yes, because the alternative is entirely terrifying.
Let's not do that again.
But unfortunately, Mr. Rich follows up his disabled metaphor with a distraction in which he compares what Magnetar did to betting against the American Dream.
It might take us a while yet to get a handle on what happened and what we can do to prevent it from happening again.