Forgive me if I feel a bit skeptical about the finance and banking industry at the moment. It seems like this whole recession problem that we are having now thanks to the subprime is all due to greed itself and there was really nothing to govern it and pull the plug when they were already seeing it coming. But then, why would anyone in the industry want to pull the plug anyway?
The end of Wall Streets Boom on Portfolio.com was definately a good read on this matter and got me thinking.
The rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. The rating agencies are scared to death. They’re scared to death about doing nothing because they’ll look like fools if they do nothing.
To me, it’s like “we should play the game as long as possible and bullshit all the way, promise crazy return rates, lie if it’s needed, market it to as much investor to buy as soon as possible. Other companies, agencies, banks or firms (whatever you wanna call them) are doing it and so are we so that we can stay alive. Let’s just do it until the bubble burst. Who cares? I get what I want and only fools will fall for it.”
To get paid, these agencies will need to produce something. And they get paid by looking busy and analyze whatever that’s on the table. Heck, it doesn’t matter if the analyze was correct at all, there are always investors, private and governments funds who’s gonna buy eventually, right? Oh, there’s an incentive or commission? Let’s bite and make it pretty, together.
He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.
Note: I’m not burnt or lost anything from this slowdown or whatever people is calling it. It just seems stupid after looking at the cause of the whole subprime mortgage credit problem. I wonder how those people who cheat, promise lies and bullshit gonna ever sleep and make peace with themselves at the end of the day. The first person they should screw is really, themselves.
The entire compensation structure of Wall Street firms encourage big risk taking and greed. In good times, they all make money and the investors are happy with the returns. In bad times, they blame the economy slowdown. Yet, they get rewarded with handsome bonuses in both instances even though they didn’t beat the market.
I’m curious about CEO with big fat paychecks and bonuses as well. Some of them are really in their own league when it comes to bullshitting and lying. I’m not talking about Bill Gates, Steve Jobs or Warren Buffet, I’m talking about moron CEOs. Corprorates just allow them to walk in and away handsomely and I wonder if there’s some kind of brain damage in those who brought them in.
Anyway, greed is just human nature. Business is about making money, ROI, Revenue, Profit, Cashflow and we’re all human, right?
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