Wednesday, 20 January 2010 23:00

Op-Ed Email from a Subscriber

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An op-ed email from a subscriber:

Hi Reggie:

Just a note to say your opinions as expressed in recent posts on
Boombustblog and ZH seem to make a lot of sense!  Have you sent them to the editorial pages of the WSJ or FT?

Also, I'm surprised there has been no discussion about the ethical and political ramifications of banks, etc using Federal funding and guarantees, whether implicit or explicit, to pursue proprietary trading strategies.  That is to say, to the extent that the business of assisting clients in funding economically useful endeavors that help grow the economy in a sustainable manner is being replaced by proprietary trading in a strictly a zero sum game, it seems a dubious path for a nation to follow.  In this situation, as Janet Tavakoli has pointed out, the concept of assisting a "client" in funding economic growth that can be shared throughout the economy is, instead, replaced by having a "counterparty" from whom money can be won through trading schemes.  It would be interesting to see the debate that ensues about whether the economic value of trading exceeds the cost of dividing market participants (including the unwitting ones who depend upon the actions of their pension fund and retirement fund managers) into those who win (e.g. GS) and those who lose.

 We have already seen how the results of trading leads the winners to enthusiastically self-anoint themselves as "the best and brightest", to feel deserving of riches and blessings, and to apply their "superior" talents to create obfuscation and information asymmetries that help them realize their profits.

It is one thing to pursue this business model among willing
participants who use private capital but, is it really in America's
best interest, ethically and politically, to let select investment
banks employ taxpayer's money in financial trading schemes which inherently view other Americans, as well as America's overseas allies, and America's adversaries, as mere financial counterparties from whom money can be won?  Isn't there a policy issue somewhere in this?  In supplying this public money to banks, is America, in effect, endorsing a national policy of becoming a vampire squid which produces nothing, but searches incessantly for larger and larger pools of capital to trade against in subtle ways designed to enrich the few at the expense of the many?

America's iconic institutions, the Fed, the Treasury, the SEC, the
FDIC, the Congress, the Presidency are being sullied by an apparent aversion to transparency that seems to have ties to this trading policy. Providing public funds, etc for proprietary trading, thence, becomes a ind of national policy.  It implies a strategy, perhaps inadvertent, hat "brands" America as the trader who always wins.   A consequence f this is ill will among those who are the losers, and a new divisiveness domestically and overseas.
Read 5318 times Last modified on Friday, 22 January 2010 03:46
Reggie Middleton

Resident Contrarian Badass at BoomBustBlog (you can call me Editor-in-Chief)...

Disruptor-in-Chief at, where we're ushering the P2P Economy.