Desire and Greed: Contemplating the Need for a New Financial Markets Regulatory Regime

If desire is the emotional exponent of a human being's drive to have, then greed is the drive to have more and better. As such, it is both natural and, arguably, productive in the context of ambition or even as a component thereof. The desire to eat led early man to hunt small animals and eat whatever grew wild. The desire to eat more and better food led to spears and agriculture. The desire to illuminate dark quarters led to candles; the desire to illuminate better led to light bulbs. But, as is true for all human characteristics and emotions, the lines between a lot, too much, and excessive grow blurry as we achieve a modicum of success at each level. Light and light bulbs are great; large concentrations of unnecessary giant video screens and illumination are light pollution. Agriculture is good; a sense of entitlement to have grapes and peaches year round leads to large carbon footprints for produce. Greed is not sui generis an evil inclination; it merely carries within itself the intrinsic need for external controls where internal regulation (e.g. self control) fails.

You can see where this is leading. Credit is good and drives healthy economic growth. Excessively loose credit leads to huge losses by both lenders and borrowers. But the greed per se of both borrowers and lenders initially drove a desirable expansion of the credit markets and admirable economic growth that sustained the longest expansive business cycle in history. Greed in some form is a component of most every advancement, both technologically and socially, ever attained by the human race. The inability to set boundaries, however, at some point has its own law of diminishing returns and finally leads to undesirable outcomes. It has traditionally been the role of government to set and enforce boundaries our natural inclinations might otherwise ignore - hence, regulation of the marketplace. This regulation can be more or less heavy-handed, depending on the prevalent political philosophy. But regulation is a natural systemic societal response to human self awareness: we know that we tend to break through the boundaries between healthy greed and unhealthy excess. It's where can do becomes must have. We are only human, after all. We live in a society where worth is measured by the size of your balance sheet. Regulation is necessary; however the form and substance of regulation needs to reflect market reality going forward, rather than being a legislated response to the crises of the past.

The AIG Bonuses: The Disingenuity of Distractive Politics

More money is wasted on federal budget earmarks in one day than the AIG bonus payouts. Feckless politicians scramble to fund projects that benefit no-one and are a manifest waste of taxpayer money. This has been going on for decades, and very little has been done to change this system of legal pick-pocketing. President Obama campaigned on a promise to do away with earmarks; presented with his first chance to do so, he promised: "next time". The uproar caused by the AIG Financial Products bonus payouts is not in itself unwarranted - why should the very unit that sank the company be rewarded so handsomely? But it is both misdirection, as well as misdirected. Misdirection, because the amount of money (some $210 million at last tally) is irrelevant in the context of the trillion-plus dollars at stake in the current economic resuscitation efforts, including the so-called bailout of the financial system. Politicians are reacting with base populist fervor in an effort to soothe their constituents. The AIG FP bonuses are not a symptom of the abuse that led to the financial system's meltdown; rather, the entire situation is indicative of the inability of career politicians to manage private sector business. Misdirected, because the target of the apoplectic politicians and the sign-carrying masses is the recipients of the bonuses. Assuming that what they did in the course of their employment with AIG was neither criminal nor negligent (but simply stupid and ignorant of actual credit risk), they are being accused of accepting money which was lawfully offered to them by their employer. Is there a living person who would tell their manager that they would refuse any retention bonus money because it was undeserved? In this economy, it may very well be the last significant payout they ever see. They have families; children to send to university. It would be a gross miscarriage of justice to publish the names of the recipients, creating as it would the possibility - indeed, the probability - that they will be targeted for abuse by vengeful and misguided citizens.

Better to set our sights on those who knew of and authorized the payments. It is becoming clear that Secretary Geithner was aware of the contractual obligations. Is the same true of the House and Senate Financial Services Committees? I would be much more interested in finding the true culprits in mismanaging the huge sums of money at stake than a few guys at AIG who did what anyone else would have done - and did so legally and without guile.

empty saddles

stop. stop what you are doing, stand still, and think for a few moments. think about what would happen if you were to suddenly cease to be. who would miss you, and why? who would you like to be missed by? would any useful thing go unfinished - or unstarted? think yourself away from this world. the hole you would leave, or the lack of such a hole. even the biggest of us, the most engaged, the most brash and forceful, the unflaggingly ambitious are forgotten; soon by most, eventually by all.

make your short presence worthwhile for as many as you can. and painful for as few.

Leon WHO??? For WHICH Job????

There is definitely more to this decision than meets the eye. The media are still trying to work it out, but Speaker Pelosi's sudden about face without any additional public explanation from Mr Obama is a clear indication that something has been communicated to the Democratic leadership to which the general public is not (yet?) privy. The simplest inference to draw - and perhaps the correct one, if you apply Occam's razor - is that the position of the Director, Central Intelligence is being degraded in favor of a strengthening of that of the Director, National Intelligence. Panetta will be a good soldier without trying to overstep his bounds, and the DNI will not have to worry about some frisky and ambitious DCI second-guessing him or trying to actually do more than simply manage the CIA. Panetta will be the most senior HR manager in the world.

I like the decision because it shows a Machiavellian side of the soon-to-be inaugurated President that I was afraid did not exist. There have long been too many cooks in the kitchen of US intelligence policy. Once Obama is sure he has control over the intelligence establishment, and is confident in its anaytical output and operational capabilities, we may see a strengthening of the constituent agencies and especially a long-overdue increase in the emphasis on Human Intelligence.