Wednesday, February 11, 2009

Howie, Howie, Howie...

By Carl

Why do you write stuff like this?

I'm not an economist, but when Tim Geithner unveils his long-awaited bailout plan and the Dow plunges nearly 400 points, that's probably not a good sign.

You're right, Howard Kurtz. You're not an economist.

Anybody who's spent even the past three months watching the market can tell you the Dow Jones Industrial Average bears about as much resemblance to good economics as Alex Rodriguez does to clean living: none!

When Obama was inaugurated, and a president who wasn't warming the chair of the Oval waiting for the moving van took charge, did the market leap skyward, aware that finally the problems in the economy would be looked at as more than a band-aid-able scratch?

Nope. Dropped 300 points. Why?

Who knows?

On the other hand, Howie, you almost get it right here. Or rather, Obama does:

The president told ABC's Terry Moran that Wall Street wants a magic bullet, a painless solution. That may be right, and it ain't gonna happen. Too many financial institutions made too many bad decisions and are in too deep a hole. You can't print enough dollars to make up all the losses.

I assume your little editorial comment after the indirect quote is an acknowledgement that this problem isn't going away soon, but here's what you missed, and why the Dow dropped yesterday:

It's not about the uncertainty of the plan, or the pain involved. It's that Wall Street realized the cushy little ride they've taken on the backs of Americans is not as safe and stable as they thought it had been, and that their days of automatic profits are over.

Let's face facts: The easiest job in America is moving money around, whether you are a broker or a banker or an investor. All it takes is luck. It's a glorified lottery that involves an MBA and a fairly expensive suit to play.

That's all it is. It ain't brain surgery and nobody dies if you screw up. There's no heavy lifting involved, and you get not only a nice salary, but a handsome bonus at the end of the year, plus an expense account you can run up with your buddies at Scores because, hey, one day they may have a few bucks laying around and suddenly you're a rainmaker!

Not so much, anymore! Now Wall Street can expect to be scrutinized and observed and dissected carefully by an SEC that for the past eight years has been so woefully lacking in oversight that it missed two, count 'em, two stock bubbles! No other administration in the history of America has presided over the collapse of two stock market bubbles, until George W. Bush (the burst of Clinton's dot-com bubble and now the mortgage-derivative bubble)

And if not scrutinized by the SEC, then their own shareholders are going to scream bloody murder if expenses aren't brought into line again, and deals aren't more carefully examined, and the board of directors isn't committed to its primary fiduciary duty of actually overseeing management.

This is why Wall Street is down, althoigh I believe it has hit bottom, barring a real screw up globally. They'll actually have to work for a living now. That would depress anyone.

(Cross-posted at Simply Left Behind.)

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