Walter Williams and Thomas Sowell are teaming up on spinning a version that blaming government regulation as the root cause of current finance meltdown. This is the right wing blaming government perspective. This is nothing new to me. In the same group, there is another spin doctor who blames the Fed for all the ill in the finance and economy of the nation. They are entitled to their opinions.
Then there is another group such as the left that blames the Greed and recklessness of the Wall Street CEOs as the root cause of current meltdown in Wall Street. They are including the insiders that work in the investment firm of Wall Street. The over leverage of these investment banks are not a result of the system according to William D Cohan in his book entitled “The house of card”. He has been on Charles Rose program twice. He was an investment banker with Lazard, an investment firm also on Wall Street.
He likes to point out the fact that Lazard and a couple of investment firms on Wall Street did not follow the bandwagon of reckless leveraging of other people money as a way to enrich themselves. This is not a system wide problem as many people would like to say. There are some prudent and smart investors in the crowd. The time when he uses the word system as in systemic problem is when he refers to the reward system of Wall Street. He is very dismissive on this system of reward for the workers of Wall Street.
He likes to use the Bear Stearns as an example of the mentality of Wall Street mainstream investment firms and the egregious crowd of the Wall Street. He says except Goldman Sachs that has a system of leadership replenishment that keep the CEOs on the ball. The rest of the Wall Street investment firm CEOS are complacent folk that refuse to give up their seat once they reached the top.
The technical issue of diversification is also raised during the discussion by Kate Kelly who is also a reporter from Wall Street Journal. She would offer that suggestion diversification would prevent the problem of excessive leverage. Cohan fights back with an example of Lehman Brother which is as diversified as it can but still going under during this crisis. They are also operating on overnight borrowing from other commercial banks. When the credit crunch hits, the source of fund stops, the firm goes belly up in one day.
Cohan praises the CEOs and the board of director for their courageous acts at the last two days of Bear Stearns. Alan Schawrcz is constantly mentioned at this period as a good fire fighter. He is the second man in the organization running the show at the end. Jimmy Kane was the top man, but he has his eye off the ball for a while and focuses more in enjoying his status and perks such as playing the game of bridge and golf then managing business.
He also reveals the fact that Hank Paulson and Tim Geithner have the final say on whether the Bear Stearns will survive or not. They would give the firm only one week to raise enough reserve to meet Fed requirement. Otherwise, they would be forced to close down. He said that this is to avoid the concern of “moral hazard” that many free market supporter object.
The guests also comment the current attempt of JP Morgan and Goldman Sachs to return all the TARP fund and going back to status quote. The agreement of the panelists is that the current Obama administration is not going to let that happen again. This is under the pressure and objection from the public that government bailing out the Wall Street without any oversight of the money.
Going back to status quote means business as usual, i.e. returning to the reckless leverage and betting of the past years to reward themselves with excessive bonus and outrageous employment contract even when they fail to do a good job.
Paul Greenberg is the author that I happen to come across on CSPAN “After Word” program. He is a main stable of the Washington Post. He is one of the foreign policy wonks on the Washington Belt way. An article written by him is bashing the North Korea nuke testing and its implication on the Iran nuke development program. Other writer such as William Safire, William Kristal and Richard Pearl are no longer writing for Washington Post.
Nathan Sales is a professor with George Mason University of the D.C. area. He has a piece on Washington Post criticizing the appointment of Sonja Sotomayor as the new Supreme Court justice. Here is the following view on the role of a justice of conservative. “The supreme Court’s job is not to second guess Congress and the president’s counter terrorism policies. Instead, its task is to faithfully enforce clear constitutional commands and where the constitution is silent, to stay out of the political branch’s way.”
Constitution after all is just as useless as any other so-called guidance when it comes to controversial subjects or hot button issues. It will silent when it is unsure of the issue and leave it to the political reality to sort them out. It could be done brute force or power of persuasion.
This is the job that lawyers and justices get paid big buck to do. The reality is Supreme Court justices are the groups of people decide what to make of all the disputes and controversial issues. Sometime the court swings to the left, other times to the right. There is no rule to go by. This is why too often people referring to the constitution as a “living document”.
Last night there is an interview of the author of an upcoming article in NYT this weekend. It is about the style and character of Bill Clinton and Barack Obama as president of USA. How they think and how they work in coming to a decision. How they work with the people surrounding him.
Basically, it is a decisive, focusing, and methodical, versus free ranging, hedging, slicing and dicing. Obama was attributed with the former characterization and Clinton with the latter.
Bill Clinton has changed a lot after he had heart bypass surgery. He is less cantankerous, tumultuous. Obama is very self control and calm in contrast.
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