Tag Archives: Pirates

The Pirate Pose

David Leonhardt today

What happened? Banks borrowed money from lenders around the world. The bankers then kept a big chunk of that money for themselves, calling it “management fees” or “performance bonuses.” Once the investments were exposed as hopeless, the lenders — ordinary savers, foreign countries, other banks, you name it — were repaid with government bailouts.

In effect, the bankers had siphoned off this bailout money in advance, years before the government had spent it.

I understand this chain of events sounds a bit like a conspiracy. And in some cases, it surely was. Some A.I.G. employees, to take one example, had to have understood what their credit derivative division in London was doing. But more innocent optimism probably played a role, too. The human mind has a tremendous ability to rationalize, and the possibility of making millions of dollars invites some hard-core rationalization.

Either way, the bottom line is the same: given an incentive to loot, Wall Street did so. “If you think of the financial system as a whole,” Mr. Romer said, “it actually has an incentive to trigger the rare occasions in which tens or hundreds of billions of dollars come flowing out of the Treasury.”

I can’t understand the compunction to call the set of rules, institutions, laws, and regulations in the market of the last 40 years capitalism.  Under no understanding of capitalism do the rewards of risk-taking go to the pirate, but the losses to the public.

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Pirates Attack!

From the New York Comptroller, we learn pirates have ransacked TARP: 

New York State Comptroller Thomas DiNapoli said that total Wall Street bonuses totaled $18.4 billion last year. Though that represented a 44% drop from the previous year, the size of the bonus pool was the sixth-highest ever.
At first I felt outraged, but then I thought, well, this is what public choice theorists have predicted. A vision then came to me.  I saw the United States as an old bitch gone in the teeth, teetering on the brink as a botched civilization.  If TARP was a disappointment, if you think these bonuses are only the beginning, wait till we watch the stimulus funds trickle to every crony, every power-grubbing whore, every brother-in-law of anybody who has a government job. These corsairs–the bankers, the interest groups, the lobbyists, the commissars of public education–these freebooters will once and for all kill the State. They will bring this bitch down. That is my vision. The stimulus package is nothing less than a prescription for slow suicide.  The cure is worse than the disease. Aegrescit medendo!  The government is preying upon the weak: future generations, anyone who can’t vote today, who couldn’t tell you what stimulate means. If you support the stimulus, take a second, and ask yourself how you came to enslave the unborn. That is all. 

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