I wasn't going to write about this, because I really don't have much to add. But people keep mailing it to me, so in order to shut you all up, I'll chip in.
As everyone knows by now, we're in the midst of a really horrible
financial disaster. I've argued in the past on this blog that the root cause of the entire disaster is pure, simple stupidity on the part of people in the financial business. People gave out mortgages that any
sane rational person would have considered ridiculous. And then they built huge, elaborate financial structures on top of those mortgages, pretending that by somehow piling layer upon layer, loan upon loan, that
they were somehow creating something that could be considered real wealth.
They gave themselves bonuses that boggled the mind. Even after the whole ridiculous system came tumbling down, they continue to give themselves ridiculous bonuses. Insane bonuses. They've been writing themselves checks for millions of dollars to continue to operate their
businesses - even after taking billions of dollars in loans from the government to prevent them from going out of business. I consider
this to be downright criminal. But even if it's not criminal, it's
incredibly stupid. The very people who ran those firms right to the edge of bankruptcy, who nearly took down our entire financial system
are being rewarded. Not only are they being allowed to continue
to rut the businesses that they pretty much destroyed, but they've
been paying themselves an astonishing amount of money to do it. And now they're complaining bitterly about the fact that the government
wants to limit them to a paltry half-million dollars of salary per year.
They argue that they must be allowed to earn more than that. Because after all, the people who run those businesses are special. They're "the best and the brightest". They're
extra-smart. No one else could possibly run those businesses. We can't rely on anyone who'd accept a puny half-mil - they won't be smart enough. They don't have the special knowledge of the business that these people do.
There's one minor problem with that argument: it doesn't work. A couple of weeks ago, some idiot at JP Morgan circulated a chart that was supposed to summarize just how bad the financial disaster has been. The chart circulated for a couple of weeks - bounced from mailbox to mailbox, sent from one financial genius to another.
Only the chart was blatantly, obviously, trivially wrong, and anyone who had the slightest damned clue of the assets those businesses managed - i.e., the kind of thing that the idiot who drew the chart was supposed to know - should have been able to tell at a glance how wrong it was. But they didn't. In fact, the damned thing didn't stop circulating until (of all people) Bob Cringely
flamed it. Go look at the chart - it's up at the top of this post.
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