Blame As A Means To A Political End

Since I'm on the topic of investments, it's crazy how politics works eh? When Bush jr. attempted to beging the process of reforming Wall St. (what a nutty neo-con, eh?) he was stopped by? Anyone? Dodd and Obama and other Democrats. They probably said things like "government has no place on Wall St."

Now, the tide has changed. Obama wants to reform Wall St. because it's the populist and vote winning thing to do. The scapegoat? Because we all need one, right? Anyone who watches sports knows there always has to be one. Never look at the team or management. Look for the "lazy European" or isolate one little play that cost a goal. Same crap in politics. Of course,Obama has a halo on his head and it's so easy to blame banks so it's a no-brainer to single out Goldman Sachs.

Goldman Sachs did play a risky game. No doubt about it. However, it wasn't illgeal; it was unethical. It was a form of short selling at its worst but I'm willing to bet, like my example in the last post of the client who wanted a portfolio of nothing but income trusts, most of the investors involved knew exactly what they were doing. Only liberals believe in the philosophy of the sheep and the wolf - more on this in the next post. But the company has been arond since Doyle was writing Sherlock Holmes. It's one of the most successful banks in history. That they're arrogant is inconsequnetial. The New York Yankees are arrogant too. Who cares?

The truth is, Obama is absolving the role the government played in all this. Actually, they probably started the whole damn thing with Fannie Mae and Freddie Mac (Bonnie & Clyde). They're the ones who hastened the housing bubble. Coercing banks to lend money to high risk clients was a government idea; not a private bank one. Another issue was the Federal Reserve being looser than wives of Roman emperors using their assets to further their political ambitions with credit.

Which brings me to "reform." Sure. Reform away. But doing it by blaming one player should give pause to the quality of the cure for a disease. Remember: The process does matter.

One of the things Obama is looking for is "transparency." I'm all for transparency. He forced, for example, credit cards to stop the fine print bull. That was good. Still, in life, certain things are best left unsaid. Investments have so many mercurial attributes it's impossible to regulate it unless you flat out take it over. It's human economic interaction at its height and you have to, dare I say it, trust it. Pink sheets, OTC trades - whatever - are risky investments too. The best thing to do is be vigilant and hope you have a broker with wise words to share. The government can't do it all.

Ironically, bonds are notorious for their "wild west" characteristics. Getting information on some bonds is so hard you're probably better off trying to find out who killed JFK. Yet, they're the "safest" investment out there - depending on the quality.