In old world banking circles personal conduct was regulated by a moral code whereby honor and self-interest were joined at the hip. To put client capital at risk was a cardinal sin punishable by dishonor and disgrace and therefore unthinkable.

That was a century ago. Where Wall Street erred in judgment was when the giants hired physicists and mathematicians to construct  new financial instruments. These new guys were not steeped in the 100’s year old “Bankers Codes of Conduct”, nor was their family honor at stake. The financial instruments they designed were so complicated analysts were unable to evaluate them properly or assess their risk. Or, possibly, they didn‘t care

But when people are making money, and bankers are no exception, they don’t ask why. They just smile, act smart and bank the money. Effectively the morals clause implicit in traditional banking constructs no longer applied to these side bets. Since the banks, their shareholders, traders and brokerage houses were all making “bank” everybody was winning and the future was blindingly bright. That was only 2 years ago.

So we have all learned a valuable lesson again (for the third time). The notion that anything to do with money, actually gigantic money, could be self-regulating and the people involved trusted to do the “right thing” is a concept which has outlived its usefulness. Money corrupts - big Money corrupts completely. And forgetting the lessons of the past is suicidal.

I was listening to a fellow engineer (ancient like me)  on C-Span who became aware of a 4 bbl carburettor which delivered over 30 mpg…. back in 1966. He maintained the patent was purchased and the technology never utilized. The reason, he claimed, is the oil companies were in bed with the automakers and conspired to fleece the public with gas guzzlers. That greedy attitude prevailed until the CEO’s of the big three sank their companies. And now they want the people they exploited for 40 years to bail them out.

Same with the banking elite. The chiefs of our nation’s largest banks approved practices which, on paper, swelled those institutions earnings. They generated hundreds of billions of dollars of down-the-road false promise IOU’s and promptly converted that trash into real cash in their pockets. Now they are taking the gov’t bailout money and using it to pay themselves “deferred” bonuses based on those long gone phony profits. As a parting gift to the greediest pigs in the nation the leaders of that parade, the lame duck’s Bush and cronies, are making sure that happens.

What the unfortunate part of all this exploitation amounts to is the transfer of trillions of public dollars, which could be used for the public good and the health of our nation, to an extremely small portion of our population. Is this smart?

The Sarah Palin Chronicles

Out of Alaska comes an avenging angel, Sarah Palin, to save the Republican Party from annihilation.  Can she save the day?  The election?  The party?  The country’s first reaction to her was one of amazement at her choice.  Then came the huge post primary bump.  When the media finally got face to face with the candidate the gaffs began.  After the first several gaffs the country turned dubious.  A few more and fellow Republicans up for re-election begin putting some distance between themselves and Sarah Palin’s pronouncements.  It started beginning to look like choosing her could backfire on the Maverick.  Lately she has decided to ride sidesaddle in her own direction to the consternation of the McCain campaign.

When this election is over and Barack Obama is President-elect will Governor Palin fade to white in a flurry of flakes, er snowflakes, back in Alaska?  Or is the public in store for more countrified contributions from this most unlikely of places?

P.S. This blog is not meant to criticize the vice presidential candidate in any way.  She was thrown into the national spotlight with, let’s face it, practically no notice or time to prepare.  Under the circumstances, she has risen to the occasion in spectacular fashion.  I would expect the next two years to knock the rough edges off candidate Palin and to see a butterfly (floats like a butterfly, stings like a bee) born from this most interesting pupa. 

 In old world banking circles personal conduct was regulated by a moral code whereby honor and self-interest were joined at the hip.  To put client capital at risk was a cardinal sin punishable by dishonor and disgrace and therefore unthinkable.  That was way back when.  Where Greenspan erred was when Wall Street hired physicists and mathematicians to construct financial instruments. The financial instruments they designed were so complicated analysts were unable to evaluate them properly or assess their risk.  But when people are making money, and bankers are no exception, they don’t ask why.  They just smile and bank the checks.  Effectively the morals clause implicit in traditional banking constructs no longer applied to these side bets.  Since the banks, their shareholders, traders and brokerage houses were all making “bank” everybody was winning and the future was blindingly bright. 

So we have all learned a valuable lesson again (for the third time).  The notion anything to do with money, actually gigantic money, could be self-regulating and the people involved trusted to do the “right thing” is a concept which has outlived its usefulness.  Money corrupts — big Money corrupts completely.

       Sad.

The best explanation I can find for a reason why people can hold such vastly different opinions after analyzing the same “facts” is provided by Farhad Manjoo in his book “True enough: Learning to live in a post-fact society”.  In his book Manjoo cites research which proves people tend to seek out information and interpret it in a way which confirms their beliefs, while avoiding information they find unpleasant or contrary. By looking for information which conforms to our beliefs we automatically bias our own opinions.  This tendency of everyone to screen their own input is called selective exposure by today’s psychologists.

What selective exposure has led to in the internet age is a splintering of society.  Since anyone can now seek out others online who hold similar opinions to their own, it is easy to dismiss all opinions contrary to those we prefer. “Facts” can always be found to support any theory, no matter how far off the beaten path or ridiculous.  Smoking is a perfect example.  Everybody should be able to agree on the fact that smoking either is or is not bad for our health. However, people still hold opinions and facts which support both sides of this argument.

So far society has been able to find its way between the “proven” positions of its extremists.  We all just need to remember that “facts” are in the mind of the holder as beauty is in the eye of the beholder and as such are subject to our own personal bias.  In the absence of conclusive proof to support any particular point of view we must realize all points of view have some validity.  Therefore, we all need to increase our tolerance to ideas contrary to our own.