Friday, September 19, 2008
It's obviously sad and sobering to watch the financial crisis unfold, but for me it is at a human level not at an institutional level. I don't respect all the media rhetoric and blame about "short sellers" and "greedy executives", and especially not John McCain calling for the firing of Chairman Cox (great editorial today in the most-conservative of papers - the WSJ - calling him "un-presidential").
The rhetoric shows a lack of understanding that markets move, and people behave, the way they are paid to by their shareholders (who elect the board after all). The blame game (read Paul Kedrosky this week - great commentary) is naive.
No question the men running the major institutions are smart and aggressive, and as a result they take risk and sometimes it doesn't play out - that's why it's called risk. But it's bad for the country and the economy when it plays out at this scale and affects as many people's lives as it is this time so sadly a bailout is needed.
New York Magazine puts it in perspective though, with the article Bank on it this week - Why Lehman Brothers wasn't too venerable to fail. It tells the story of how Lehman is not an old and venerated institution (as the media has described it) but instead the result of a revolving door of mergers, failures and spin outs reaching back to 1867.