What’s the go with the complete lack of coverage on the topic of the Asian Clearing Union accepting euro for payment from Jan 2009? Big signal for next USD-depreciation phase when Asian central banks make an alternative official.

Are these companies operating in the zone of insolvency? I would say that the actions of the Fed over the last six months would fairly clearly indicate that to be the case. And yet, the good officers and directors of said corporations are addressing the interests of only a very few … not the shareholders, not the employees, not the citizens of the nation who are in a very real sense, stakeholders … and who are now suffering terribly at the hands of these shysters who pretend to serve shareholders. They serve shareholders when an action that favors them also favors shareholders. First and foremost: self-interest, wealth, power.

Lock ‘em all up. The highest levels of our financial system comprise a cesspool of historical dimension, and I believe they will _not_ be out of reach when their prior and current actions boomerang back at them … it’s already started and it’s nowhere near finished. Greed made them, greed will bring them down.

Hopefully some of those young soldiers who have a sense of ethics, of right and wrong, will take their place and will be patriotic enough to set aside some portion of their personal ambition and greed so as to avoid collateral damage to substantially everyone else in the system – those who are not money changers and counters of Mexican jumping beans. Maybe we will even see CEOs who don’t make 1000 times what the janitors make, and who don’t sail away from the trouble they caused suspended from golden parachutes awarded by their Comp Committee co-conspirators.

Time for the regulators to start doing their job. And by regulators I don’t mean the Fed. I think we will see a new sheriff in town soon … and he may just see to it that the regulations and laws of this land are enforced and strengthened to protect against future debacles … assuming the financial system survives the body blow inflicted upon it by those who have been running it.

Princeton does not have an MBA program.

there are derivatives on which you can trade the weather. Not surprising that an esteemed professor teaching in an MBA program wouldn’t know that. MBA’s are a vetting process to ensure that you aren’t stupid, but they hardly ensure that you are actually smart – in the “street sense” vs. “book sense” – the former being all that matters in the real world.

Additionally, why shouldn’t you be able to trade CDS if you don’t have an underlying position in a firm’s debt structure? He TOTALLY misses the problem, which is that there should be substantial margin requirements for the SELLERS of CDS. If that were the case, the CDS tsunami wouldn’t exist. I’d prefer to see things exchange traded vs. OTC, but since OTC presumably isn’t going away, then there should be significant improvements in margin regulation for this area.

Guess I’ll have to add Princeton to my list of unimpressible institutions.

Gamma

I guess you’re getting piled on here, but I can’t resist joining…

Firstly, you’re correct that the narrowly defined tenets of capitalism is to maximize the return on capital. But Reinhardt isn’t appealing to bankers as capitalists. He’s appealing to them as Americans and as human beings. Physicians are nominally capitalists too (they’re the quintessential small business owner). But they see themselves as much more than that, and use the sum of their roles (as physicians, as local community members, as stewards of health care resources, and yes, as businessmen) to guide their decisions. Most of the time, when the ethical precepts of the medical arts come in conflict with the capitalist principles of their small business, they choose the former course of action. Reinhardt is asking bankers to do the same. He’s not saying capitalists should be patriots. He’s saying bankers should be more than merely capitalists.

Secondly, you are incredibly superficial in your thinking if you think that somehow your country of residence doesn’t matter to your attempts to be a pure capitalist. Without the regulatory, enforcement, legal, cultural, etc. etc. regimes that the government and American society have put in place, there is no way in hell that you would be able to be a capitalist. Who would invest their money in a hedge fund headquartered in NYC, with a bunch of managers you’ve never met, unless you have faith that the government’s regulatory and enforcement arms are ensuring that you’ll be following the law? And when you take your billion dollar nest egg and put it in a bank, what’s to keep that bank from absconding with that money? For that matter, what prevents the local villagers with pitchforks in hand from storming your gated community and stripping you of every hard asset you own (plus your wife and kids for good measure)? Heck the very notion of a corporation, so necessary to the practice of capitalism these days, is a creation of the law of your country (and state). If you want a libertarian paradise, try Darfur, Sudan. Last I checked, no one’s managed to become a billionaire from there despite the absolute lack of any “overbearing” government or quaint notions like patriotism or local community.

So why does the government create and maintain these enormous, complicated structures that allow capitalism to function? Because they’ve recognized that when properly harnessed, capitalism can serve the public good. You’re right that capitalism is defined to serve capital. But that’s not the government’s purpose. And when capitalism isn’t serving the public good, it’s very appropriate for the government to revisit the systems it has in place to see how best to revise and re-harness capitalism to serve the public good (or to throw it out and try a different system…). Bankers can be a part of that process, recognizing that they are more than just mere capitalists, or they can let others dictate these terms.

So should you be a patriot? Yes you should. It’s one of the roles you should undertake as someone who enjoys the privileges of citizenship in this country. It has nothing to do with being a capitalist. Patriotism is indeed the last refuge of the scoundrel, but that doesn’t mean all patriots are scoundrels (logic 101 if you skipped that in your capitalist training). Because there’s more to life than just being a capitalist. And if capitalism truly can’t be harnessed for the public good, if that’s so antithetical to the very theory of capitalism, then the government shouldn’t be bending over backward right now trying to save it.

Oh yeah, and lastly, you’re betraying capitalism if you say you don’t want any borders or wars. Plenty of capitalists find loads of profits in wars and arbitrage opportunities in borders. Shame on you to think of something besides money, right? Or perhaps there’s a twinge of a desire for something besides money in you yet…?

Rootless begins his scintillating first post with:

“I am not a patriot. I don’t love “my country”. I am with Samuel Johnson… Thus, I can’t follow the impetus…Thus why would I want to prefer…I never would want to serve “my country”. I never would go to war “for my country….”

with a follow up post that actually accuses another of “egoism”.

And then Rootless leaves us in a state of breathless anticipation, but undeniable relief with:

“Thanks for the replies to my first comment. I’ll try to answer to them later.”

Oh my…Thank you Rootless. I can’t tell you how concerned I was that you weren’t going to follow up!

Talk about egoism!

You’ve exercised your right of free speech, granted to you by this country, now I’ll exercise mine:

Think San Francisco in the late 60s. A group of 5 Beatniks, replete is special psychedelic tie die, hittin’ the ganja weed after a 48 hour LSD bender and pondering the mysteries of the universe and our place in it…couldn’t even begin to capture the nano-sized insignificance of your refusal to serve this country. I mean really…what are you withholding…anonymous blogger postings with rehashed, regurgitated Leftist blather?

This guy is clueless. Derivatives are mostly profitable in large part because they are an indirect way of doing banking, brokerage, and insuring business without the burdens of regulation. Avoidance of these regulatory burdens imposes costs on society. Derivatives allow foreign investors to invest in total return swaps that avoid local country withholding tax on dividends, interest, guarantee fees, and so on, which undercuts the progressive nature of the tax system by reducing taxes on wealthy owners of capital. Derivatives allow investment funds to effectively engage in the business of insuring risk and lending without being subject to regulatory capital requirements that prevent companies from causing too much systematic risk. Derivatives allow investment funds to avoid disclosure required when one acquires a 5% stake in a public company, disclosure which is intended to protect outside minority passive investors. I could go on.

I would love to be finished with nationalism and war, and let free markets rule everything … EXCEPT … for one inconvenient fact: free markets can exist only given strong public institutions that enforce the rule of law and property rights.

We need to set about the task of harmonizing governing institutions around the world. Purely financial globalization is threatening to bankrupt us all with its Ponzi schemes long before it teaches the developing economies the value of transparency, due process, and human rights.

I don’t think the value system of the Marine corps is some kind of panacea for our banking ills, but Professor Reinhardt is correct to point out that values other than the almighty dollar play a necessary role in a civilization capable of sustaining modern banking.