From Wall St. To Whine St.

My sister is one of those leftists who reads the New York Times (I won't even mention the left-wing rag blogs she pollutes her mind with), and declares every so often naked blanket statements about something.

A personal favorite one of mine is "Wall St. is so greedy!"

As if greed has a GPS and stops on, you got it, Wall st.! *Winks. Shoots air pistols*

No, the government isn't greedy. Nah. They're just filled with the same hacks who worked on Wall St. who suddenly had a change of heart and decided to serve in the public interest. Sure.

It's so annoying to hear a person who never worked in financial services rail against "Wall St." They speak as if it's one monolithic entity. A place where evil suits meet in a town square to plot mass financial destruction and scurry on over to their soot filled offices.

To a certain extent it is. There are some priceless assholes in banking. However, in my experience working in it for 10 years, it's best to accord some perspective on the industry.

"You know on Wall. St they..." and "Wall St. is so evil" and "Wall St. is a racket Obama must clean up." Wall St, Wall St., Wall St. all the time! It's enough to make you want to scream like Sylvester the Cat "Ah, shaddap!" Half these people don't know what they're speaking of when it comes to Wall St. They can barely invest their own money or balance their own household budgets yet they somehow want to link their financial illiteracy and ineptitude with, say it, WALL STREET! Say it again, WALL STREET.

You would think these people reside on Sesame Street.

And what about Obama? Whatever. Talk to the hand. Have you ever seen a President say "I propose" more than him? Propose nothing.

Back to my sister, a superior writer to me but inferior mathematically (and that's not saying much), although I do have quite the panache in the kitchen. Hang on. She's better. Anyway.

She sent me a link to a New York Times article by Angelo Matera in the business section about hedge funds. Comment, obviously, will follow:

In today’s NY Times, Peter Goodman’s excellent profile of former Federal Reserve Chairman Alan Greenspan confirms what I’ve been writing, that it was a specific “structure of sin”—financial speculation—rather than mere human greed (or bad home loans) that created the credit crisis. I’d always wondered how a rigid anti-government libertarian ideologue like Greenspan—an Ayn Rand disciple, no less—managed to get appointed to the most powerful economic post in the world. If he had been running the Food and Drug Administration, he would have been exposed within a few months, as soon as the first deaths caused by lax food inspection started happening. But the byzantine complexities of global finance, and the fact that Ponzi Schemes can run for a long time before collapsing, meant Greenspan could reign for twenty years before the effects of his blindness would be seen in today’s financial meltdown. Despite warnings from experts, Greenspan did nothing to regulate the market for financial contracts known as derivatives as it grew from “a relative pittance just two decades ago” to $106 trillion in 2002 to $531 trillion today. Along the way he had accomplices from across the political spectrum, from current McCain advisor Phil Gramm, to Clinton Treasury Secretaries Robert E. Rubin and Lawrence Summers. (If anything, this financial crisis should convince doubters that we’re living under one party rule.)

Always remember this. another piece of advice. Write it down on a piece of toilet paper and carry it for the the rest of your life. It's a simple human adage: People WANT to be deceived.

The hedge fund collapse was huge because people wanted to believe. It wasn't  just Wall St. - though they do have to shoulder large parts of the blame - that was complicit in it.

I know it's hard for people to accept but we too are part of the problem. Yes, financial wizards are always dreaming up ways to gain liquidity - that's how options were invented in the early 1970s; options are a game for suckers.

Just like me and my senior partner avoided tech stocks during that bubble, we didn't jump on the hedge bus either. I never did like the word "hedge." It came at a cost because people wanted them so they went elsewhere to get some. It was an opportunity cost but a good sensible one for our business. We did something called due diligence and opted out while others in our office jumped on it - gotta get those great trailers and fees. The art of avoiding the herd mentality is a tricky one.

My point is we all have choices to make in life. We then have to live and die by the consequences of those choices.

That's where I break from writers like Mr. Matera. They always want to find someone to blame; a philosophical root for our madness. To paint the people as sheep at the hand of the wolf only detracts from personal accountability.

In addition, it's rubbish to connect Rand and Greenspan to the hedge fund mess. This line of thinking lets people off the hook. The bottom line is if we'd paid closer attention and guarded against our own "personal exuberance" maybe the powers that be wouldn't be so quick to capitalize on it.

Hedging, leveraging, short selling, options - whatever- will always be risky but legal forms of investment. This is something people should realize.