As one of those poindexters who actually likes to watch Book TV on C-SPAN-2, I blundered into an interview of Naomi Prins. The host was Senator Bernie Sanders (I-VT). Prins is presently a Senior Fellow at Demos and has had careers at Goldman Sachs and Bear Stearns.
Prins has a good deal of interesting insight into how securities are engineered from subprime loans and stamped with ratings. What stands out is how artificial securities are as an asset. It’s like putting a step ladder on a canoe. The view is good, but evenually you’re going to get wet.
Securities are synthesized from dung and straw, drenched in investment sauce, and then nestled in decorative tins by white gloved MBA castrati to afford a “product”. Naturally, banks and ratings agencies assure us that the rating on the security is meaningful. After all, who is more sober and conservative than a banker?
Perhaps investment banking as it is now practiced should be regarded as a pathological condition- a form of predatory, sociopathic behavior worthy of a psychiatric profile? Investment banking is a profession dedicated to the proposition that the mere repackaging and skimming of the wealth of others is the desired outcome. It is a bubble industry specializing in puffery and deception.
My libertarian friends assure me that the free market place is the most natural and efficient form of economic intercourse. Of course, the problem is that there isn’t a substantially free market anywhere. We have regulated markets because some people invariably game the system at the expense of others, resulting in a convulsive discharge of legislation.
One could take a Darwinistic view and say that the victims of investment shenanigans are to blame for being greedy and uninformed. There is truth in caveat emptor, but one of the reasons we have civilization is to buffer out the harshness of life. How do you protect the greedy and uninformed from the greedy and deceitful? It is the eternal problem.
The most despicable part of the 2008-9 financial collapse is the lack of accountability on the part of the skunks who invented and promulgated the unstable investment devices. Their heads should be impaled on sticks and planted in the financial districts for all to see. Figuratively, I suppose.