Letters to the Editor
AskDong
Published Letters: 37 Editor's Choice: 9
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This is should not be class warfare
[Read the article: Nightmare on Wall Street]
[Read more letters about this article: Here]Make no mistake about it, the Fed has intervened not to the save in the investor class as so many here are want to believe. They have intervened to save the financial system. There are valid arguments about the moral hazard such a deal imposes, and if the bail out is even necessary, but it's not like either investors or employees of Bear are walking away with much. I know from an employee that Bear bonuses over 250k were not to vest for another 5 years and were equity based. Investors are getting pennies on the dollar for their investment.
The ultimate problem that will not go away is what do you do about risk that can ultimately make any investment worthless. Obviously there are cases of criminal fraud which must be penalized, but it's a slippery slope. Do we return the days of debtor prisons?
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Answering My Critics
[Read the article: Nightmare on Wall Street]
[Read more letters about this article: Here]I didn't realize I had so many critics, but I guess I do.
James Levy, I didn't suggest that we should be feeling sorry the many employees who are likely to lose their jobs. You're right hopefully they've been very unamerican have stashed away their savings. My main point is that many investors are not actually walking away with all that much, and certainly many employees are not. When the deal is valued at only $2/share, billionaires like Jospeh Lewis lose hundreds of million. Yes, he's lucky to have billions to lose, but to just assume that the "investor" class is just walking away unscathed is unfair. Don't get me wrong, the guarantee that the Fed had made that allows JP Morgan to enter in the transaction basically risk free does raise concerns.
hontonoshijin, I think you really should read what I have written both on my blog and comments here. You may not believe it but I actually am primarily concerned for working citizens. I just don't like the us vs. them attitude that pervades both sides the argument.
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All in Moderation
[Read the article: Who predicted the credit crunch abyss?]
[Read more letters about this article: Here]When the current crisis started unfolding over a year ago, I was optimistic that our financial system would stand firm, and that the risk being spread by derivatives and securitization was a good thing. I think I was wrong. I'm ever the optimist, and failed to realize how rampant short term greed is in the world at large.
I still believe that securization and derivatives are good thing with moderation. In the ideal world the packaging and slicing of risk allows people to better deploy capital, and better deployment of capital means greater economic growth. However as the crisis has ebbed and flowed, what I've most observed is that people have used securities to pass the buck with the greedy taking a cut at each level.
Flippers pass the risk to mortgage brokers who then pass it to mortgage banks who then pass it to investment banks who then pass it hedge funds, pension funds, and the like. The smart ones buy derivatives to hedge the risk along the way, and in the end someone is left holding bag. Accusatory fingers point in every direction, but in the end no one is willing to take responsibility.
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Better than Expired Coupons
[Read the article: The Wall Street Journal's Web site is already (secretly) free]
[Read more letters about this article: Here]Spoofing I think is more ethical than turning in an expired coupon. The expired coupon is not deceptive but an act of fraud since it's not actually valid.
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The Big Players Will Rig The System
[Read the article: Barney Frank's new, improved Federal Reserve]
[Read more letters about this article: Here]I think the fatal flaw of those who preach unfettered capitalism and free markets is that they somehow think that entrenched players will not protect their interests. I'm a big believer in capitalism and free markets, but I also recognize that the Government has important role to play to make sure that those in positions of power do not abuse that power to retain that power. Without government intervention, most industries would be monopolies. While I have yet to make up mind if the Bear Stearns bailout is warranted or not, the Government has a role to play to stabilize the financial markets for the benefit of society. Yes, there are lesson to be learned, but as Keynes said "in the long run we're dead." Banks are not like other companies, and especially big ones. They are too closely linked to the Fed in the creation of money.
I know there those who would argue for the elimination of the Fed and the role of money creation from the Government entirely. Who would fill that void? A private bank? And there we once again run into a problem where one big player is likely dominate and exercise market power.
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Hop shortage is real
[Read the article: A taste of North Korean beer propaganda]
[Read more letters about this article: Here]No, the the hop shortage is real. People often forget about the opportunity cost of growing one plant versus another. As American farmers shift to growing corn because of growing ethanol demand and government incentives, they have to plant less of something else. Hops is one of many plants not being grown as much, leading to rising prices... Bad for beer drinkers like myself.
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Home Equity is a poor component of Net Worth
[Read the article: Consumer pessimism]
[Read more letters about this article: Here]I've never understand the wealth effect that comes from increased home equity. It's not like people who are house rich actually decide to sell and move. A home is place to live, not an investment. Until people are willing to relocate willy nilly based on home equity to view it as such is financial trap.
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It's actually not all that bad
[Read the article: Who killed global capitalism?]
[Read more letters about this article: Here]Just looking at the S&P 500 close since 1999 ignores the effects of Dividends. So it's both worse (i.e. decline of the dollar) and not as bad as it looks. I think it's foolish to look at the performance of the stock market or even the economy over an arbitrary length of time. There will be volatility. There will be things that we do right, and plenty of things that we do wrong. Instead driving ahead with our sights set on the rear view mirror we should be looking ahead, but knowing what bumps we hit.