Scribbles

Points deducted for all bankers after the recent turn of events. While I wish I could make fun of the situation with the turmoil in the financial markets, I simply cannot. For starters, my personal investments drive an interest in seeing the market trend upwards. But beyond my bottom line, so many of my good friends are right smack in the maelstrom. It’s been an awful 1.5 weeks with no apparent end in sight.

At the higher level, the story is about when should the government bailout these banks. When is there enough “systemic risk” that the Feds should step in, perhaps to prevent the next Great Depression? So far I am not happy with the lack of transparency behind the decision making. Why is it ok to bailout Bear but to let the “free market” take its course on Lehman Brothers? When has the government *ever* given out $85 billion (like it did to AIG) to a private corporation to prevent bankruptcy? How did either the Treasury Department or the Federal Reserve gain the authority to use tax-payer funds for such actions? We can debate all day about the correctness of the action to save the US and global economy without coming to a conclusion – only time will tell. But the unilateral actions of the government smell illegitimate and non-democratic to me. While most other governments in the world would have probably done the same, they tend to be more socialist or autocratic than the US claims to not be.

Though I carp about this, I still think the AIG bailout was the right move. I just hope, albeit holding a pessimistic outlook, that we tax-payers get something out of this beyond preventing a total market meltdown. I pray that the markets calm down a little and that my friends in the industry don’t suffer too harsh a fall.