Tuesday, February 2, 2010
You're Never Too Big To Screw Up
I have been reading TOO BIG TO FAIL for the last few days now, and while I could easily use my vocabulary of four-letter words to describe the people and events that I have been reading about, it is not really necessary. I wish every member of Congress would take the time to read this book, but I know that is too much to ask for. Sorkin is telling a tale of how some very smart and talented people made some very stupid mistakes.
But, for me, the real bad guys in this whole story are those that think the field of money and banking, investment banking and securities trading do not need rules and regulations. Greed motivated a lot of the bad moves the players made, but in a climate where the wiser and older officials were married to an ideology that could not stand up to reason, made the eventual downfall all but guaranteed.
Alan Greenspan and Phil Gramm, and a few others, would be put on trial under my Alice in Wonderland World for economic and financial treason to the State. Whether they were just plain stupid or doing someone else's bidding, the final results were just the same. As the Queen said, "off with their heads!" No, I guess that is a bit of an over reaction. Let us make sure they are comfortable in their old age. Why should they be out anything because they were responsible for so many to be out the little they had?
You see, the game is not that complicated. In fact, when you strip away the fancy words like leverage and balance sheet, you begin to see how simple this game really is. A bag of shit is a bag of shit whether it is in a brown paper bag or a bag made out of silk and gold trim. Assets on the balance sheet that can not be sold, such as marketable securities, become crap. When the balance sheet fills up with crap, and that crap can not be converted into cash, the corporation is up shit's creek. It is that simple.
Once upon a time, cash was trash, but in a heart beat, cash can become king. If I have lost you at this point, don't worry about it. Pitchers and catchers report for spring training in a few days.