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Trust

Joined
2/7/08
Messages
3,261
Points
123
Interesting essay on trust at Global Research:

"You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."
 
Nice sound bite, but.... Bankers have historically been somewhere below tax collectors on the popularity list. The Knights Templar got their thanks for developing the first modern banking system at the hands of the Inquisition. This does not appear to have interfered materially with the eventual development of the industry, however, although it did rid the world of an organization that looked like it might pose a threat to the Church's power.

This guy should probably relax, maybe do a little reading. I think he might like The Merchant of Venice.
 
Hmmm, yes, quite. Nonetheless justice is being seen not to be done. And I think there's a plausible point that trust is a lubricant in economic life. Of course I operate without it but not everyone is a wolf. There are a lot of fleeced sheep who are feeling very betrayed.
 
"Though justice be thy plea, consider this:
That in the course of justice none of us
Should see salvation. We do pray for mercy,
And that same prayer doth teach us all to render
The deeds of mercy."
(The Merchant of Venice, IV.i.193-197)
Sorry, couldn't resist.

Yes, of course, trust is essential in a functioning economy. And I get that the essay is meant as an idea piece rather than careful argument, but I have a hard time sorting out from the machine-gun cut-and-paste what it is we're supposed to go do.

I mean, if Lloyd Blankfein did something that is against the law--and there are certainly plenty to choose from in this line of work--then I'm all in favor of dragging him in front of judge, jury, and so on to see what happens. But if people are looking for a few heads to adorn some bare-looking pikes on the castle walls because "bankers aren't sharing their pain" (forgetting the thousands upon thousands who lost their jobs and will never work in the profession again), then, sorry, that's not justice. Might as well throw 'em in the millpond and burn 'em if they float.
 
It's probably not a coincidence that a Christian politician advocates homosexual rape as a solution to America's financial problems, fair enough, it works fine for their priests.

He's also ignorant of history, not just the medieval/Tudor stuff that Bob cites, but shit that happened yesterday. Insider traders quite regularly do time, doesn't seem to prevent it. America executes more people than China, but actually has about the same frequency of violvent deaths over the last year as Libya. Deterrence doesn't work on criminals.

Also, my firm now sponsors Shakespeare's Globe in London, so I'm quite happy to retaliate through the Bard, and point out that Bassanio is an exemplar of good risk management in having his highly sepculative financial investments (ships trading) spread over several ventures, and not wishing to be a spoiler, good risk management foils the nasty Jewish moneylender and the good Christians crap all over him, a plot to warm the heart of any good evangelical.
"My ventures are not in one bottom trusted"...

Also, there apparently exist people who think that in some ways Mr. Blankfein is more powerful than I am. Yes, I know how stupid that sounds, but he is CEO of some finance outfit, which impresses evangelicals enough to make them think he actually controlls stuff.
CEOs don't control things, they make speeches, make some of the big decisions, but they don't control. Many spend literally weeks trying to work out what kind of stone their new corporate HQ should be covered in (yes, really).
No one is smart enough to run a bank. GS has people who modify motherboards for high frequency trading, who defend it against the queue of lawsuits from the women who've worked for it, who trade in >50,000 different financial instruments, who train people to trade these instruments, or who HR the people who train the people who trade...They have men with guns, and people running creches.
There's at least 40 different kinds of risk manager at GS, who if they are passionate about their work all suspect that something really bad could happen in their area real soon, and would really like an hour with him to explain that.
No one understands this stuff, all any one man can do is try and hire good people, kick out some of the bad ones, and shout "do good work" from a high place.

Fact is that if he had understood the problem, and had the power he'd have stopped it.

I've never had Mr. Blankfein over for dinner, so I cannot say if he is a good man, but the demands of his own wallet imply that he'd have tried really quite hard to stop the shit we went through, if he could.
 
I mean, if Lloyd Blankfein did something that is against the law--and there are certainly plenty to choose from in this line of work--then I'm all in favor of dragging him in front of judge, jury, and so on to see what happens. But if people are looking for a few heads to adorn some bare-looking pikes on the castle walls because "bankers aren't sharing their pain" (forgetting the thousands upon thousands who lost their jobs and will never work in the profession again), then, sorry, that's not justice. Might as well throw 'em in the millpond and burn 'em if they float.

Quite so. I suppose the question is: Did the big boys knowingly commit or encourage fraud? Which is very different from saying the system encourages fraud. I have no firm opinions on the matter. Though I have to add that I think trust in the financial industry is at a low ebb.
 
So rape is cool as long as you are an unpopular banker? Wow, thank god that person is an ex-aide. While I agree that WS has done a lot of wrong, I find it dubious to hear people complain about them.

Pensions, investors, home owners and home buyers, all loved Wall Street and bankers (commercial & investment) when times were great. People had no problem over leveraging, lying about their income, etc. When it all came to an end, all of a sudden the old best friend became the person who suckered them.
 
If I were going after bankers, then I'd pursue the notion of 'reckless'...
The criminal law treats behaviour where you don't care about the consequences of your actions as close to those where you have intent.

The problem is how far can a reasonable person be expected to judge the consequences of their actions ?

Between (say) a trader and a home owner there are at least 5 layers, more than between your burger and the way the cow was treated.
So...
If I eat a burger, am I responsible for the inhumane way the cow was raised ?
Some would say yes, I wouldn't, but I accept the validity of that view.

What if I chose to only eat burgers that a reputable organisation said were from cows that were treated well ?
...but that they were lying because they made money from the endorsement.

Would I be culpable ?

Also, what is a happy life for a cow ?
I don't have expertise here, do they like exercise ? what range of temperatures make them sad ?

So I am dependent upon the expertise and integrity of others.

But conversely, I could visit the farms and check for myself, and some bits of cow welfare are obvious even to a city boy like me.

Can cows make the right choices about their lives ?
Given a choice between food that was good for them and stuff that tasted nice, would they pick the 'right' one ?
I don't know, but accept that there's a good chance they'd screw up.

People are smarter than cows (except of course evangelicals), but mortgage products can be complex, and although I judge myself to be reasonably smart, I don't claim to be able to predict the future all that well, so how much duty of care should you have over others ?
Put that another way...
Do you want Mr Blankfein to decide that you shouldn't get a mortage even when you think you should ?
or more accurately, who do you trust to decide that ?
or even more accurately than that do you trust yourself to make the choice about who makes the choice ?
and the final digit of precision is that whatever you decide, it will be done by a $3 an hour operative in India typing shit into a badly written program written in Java mixed with Cobol.

None of this has simple answers.
If the Christian idea of raping bankers if they screw up was applied, then what you'd have is extreme risk aversion. Mortgages would only be given to those poeple who could prove they didn't really need it.

Could the banks do better ?
Obviously.

There is a common thread to Christian, Jewish and Moslem morality....
Nowhere does God take some peasant to the top of a mountain and say "try to do your work well, study the consequences of your actions, learn from from your mistakes and those of others, and every so often just stop and think whether this is the right course of action". The idea of competence is utterly absent from the moral systems of any faith, because competence requires thought, not belief, in fact competence requires that when you realise you are wrong you change your actions, which is so abhorrent to any religion that the only difference between the major faiths is the type of cruel death they demand for someone who changes their mind about what they believe.
 
Seems to be the case that self-righteous and ignorant lefties, wanting to put a human face to, and find scapegoats for, what went awry are gunning for the big boys. To them it's a morality tale, good versus evil, and black-and-white in its simplicity. Supposedly the boundless avarice of those at the top was the engine. Trying to make them understand the financial world in terms of structure is futile. The structure -- once understood -- can be criticised.
 
As to bigwolf's original post: the 'congressional aide' lingo comes across as rather harsh and border line vulgar on first impression. However looking back, the aide may have a point (although desperate).

In my opinion, top of the crop people like Lloyd are almost entirely detached from the set of ideas and principals the avg. american relates to. That's a problem when you have a few like Lloyd in this position of power. That being said, its not Lloyd's fault really...its the system that runs on this greed feedback mechanism and helps promote the likes of Lloyd.
 
bigbadwolf
Trying to make them understand the financial world in terms of structure is futile. The structure -- once understood -- can be criticised.

I couldn't agree more. I once engaged in thoroughly futile argument trying to explain the difference between the concept of the financial intermediary - and the actions of a an individual bank. They couldn't separate the two - if a bank did something bad, the whole system was broken.
The person in question just couldn't see that the financial sector is more than banks and has functions beyond "gambling" as they put it.
 
What's depressing is why none of this will happen...

Goldman Sachs can afford to bribe US politicians on a colossal scale, and in aggregate the US banks can contribute "campaign funds" of a few tens of millions to avoid any serious proscution.

It seems to me that if you give serious money to both political parties, then it can't be because you genuinely think their policies are good for America, or even good for you personally, you are bribing.
Actually, it would be illegal if it wasn't a bribe...

A director of a company has a duty to act in the interests of his firm, not indulge his own political or social views, so if he gives a million bucks to 'help' a politician, he is either stealing company cash or bribing.
Same goes for unions of course.

An interesting case is insider trading...
Yes, some people do get into serious trouble, but look how rarely this is a large bank, so either:
People who work for big banks are inherently more ethical
...or better at not being caught
...or as we all know make sure the right politicians get the right bribes.
 
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