Fiscal Illness

"That Wall Street view of itself as a victim has prompted much of the private murmurings and the unfortunate — or worse — outburst from Stephen A. Schwarzman, who likened the administration’s plan for taxes on private equity to “when Hitler invaded Poland in 1939.” Mr. Schwarzman later apologized for the “inappropriate analogy.”

Now Mr. Loeb, who manages about $3.4 billion at his firm, Third Point Partners, has articulated in a more thoughtful way what a lot of others in finance and business are saying.

“We have given a great deal of thought about the impact that public policy has on individual companies, industries and the economy generally,” he said. Third Point has sold its investments in big banks as a result of “regulatory headwinds”; got rid of its stake in Wellpoint, which Mr. Loeb described as “a statistically cheap stock owned by several hedge funds, but which we saw as being overly exposed to unpredictable government regulation”; and taken a short position against for-profit education companies as a result of “the government’s increased willingness to use its regulatory muscle.”

Mr. Loeb’s views, irrespective of their validity, point to a bigger problem for the economy: If business leaders have a such a distrust of government, they won’t invest in the country. And perception is becoming reality."

- "Why Wall Street Donors Are Deserting Obama", New York Times

Translation into English: Wall Street investors were perfectly OK with holding equities in banks that over-leveraged themselves to the point where they almost brought down the entire American economic system. If the government hadn't stepped in to remove debt from balance sheets of the banks, their financial house of cards would have collapsed. But when that very same government wants to regulate the banks so unstable situations like this never happen again, then Wall Street investors step back and say, "Woah! It's too risky to invest in banks, and it's all Obama's fault!

Of those who think this makes sense, exactly what mental illness do they suffer from?

While my political stances remained on the left, as I've progressed through adulthood, my notions for taking action in politics have shifted from the hard left to more moderate positions. In early adulthood, I took the easy way out: If everyone just believed what I believed, then society would be great! But as I grew up, I realized many people were never going to harbor the same positions I have. That's just the way it is.

Many of those people, it turns out, have lots of money.

For a society to function properly, everyone must play nice with each other. I may not agree with the lifestyles of those who think they need to make multi-millions of dollars per year to be happy, but my personal biases against them shouldn't infringe upon their rights. And this is a good thing.

Under the capitalist system we teach school children that we purportedly live under, those who want to be millionaires create jobs for the rest of us. They get to be super rich because we work for them, and in turn, I get a house, car, 3.4 kids, and big ass TV with one zillion cable channels out of the deal. (This deal hasn't shaken out well for me. So far, I got the car, but people keep hitting it.) This is the unwritten social contract of the American dream. It's certainly not the deal that Marx wanted, but hey -- fuck him and his cat. I'll take the deal. And I'm willing to play nice with those I disagree with if they keep up their end of the deal.

Society risks breaking down, though, when the rich choose not to keep up their end of the deal. The rich have every right to make as much money as they want. But what happens when the investment behavior of the rich becomes reckless? Well, we all should know what happens because we're living through it right now.

The passage I quoted from the New York Times is only quotable because of its surreal quality. Read it over a couple more times. Swish it around in your brain for a couple minutes. Ask yourself if the comedic ethics of Monty Python took over American society when our backs were turned?

Remind yourself that the previous sentence I wrote is a serious question.

If the New York Times has summarized the mindset of Wall Street investors -- and I'm afraid they have -- then Wall Street is certifiably nuts. But the Street holds the money; hence the power. For any economic legislation to be effective, it must address Wall Street greed encroaching into the right of employment for willing working class Americans. In short, legislation must combat Wall Street's attempt to erode the social contract which insures the American dream. Why? Because, despite what the investors on Wall Street think, they can't make as much money as the middle class is employed and happy.

One day, maybe Wall Street will realize that they need us as much as we need them.