Republicans Turn Over New Leaf!

"Obama is spending us into bankruptcy!" "The stimulus is full of pork!" Those are the cries of the republicans in the house of representatives. I guess they've got religion now that they're out of power. Perhaps we need a quick review of their performance - the performance of these same people during the six years they were in power with President Bush, 2000-2006.

In short, these guys set new records for pork and new records for increasing the national debt. Not just by a little, but by a lot!

These whores have no legs to stand on! Who cares how they voted on the stimulus!

Do you hear these facts on the national news? I don't. These people should be flayed in public, and I can't figure out why the media is letting them off the hook.

Do I love the stimulus package? I don't know. All I do know is that these republicans should have their mouths taped shut for at least two years. Maybe their other orifices as well...

Second Thoughts about the Culprits

The Good Witch talked with an old friend from far away today, a lady who is now elderly but active and who has had a good life. During the conversation her friend, who lives in North Carolina, mentioned that she had invested her life savings in Wachovia Bank stock. She has lost it all - $675,000. The good news is that her husband has some money, so they are not destitute. Is this just, as they say in golf, "the rub of the green"? I think not. Bank stock should not tank. The bad guys are getting away with financial murder.

We know what brought down the world economy. People, both individuals and officers in corporations and privately held companies, participated in a giant scam that needed no organization to succeed. The idea was simple: create and sell financial instruments that were worth much less than they were purported to be worth. Shady mortage brokers and bankers gave mortages they should not have given. Companies put together packages of these sub-prime mortgages, rating companies rated them as "investment grade", and brokers sold them to unsuspecting clients. The original offering of mortages to unqualified buyers fueled the real estate boom that went bust, and an unbelievable amount of this junk debt has been written down or written off.

Who did this to our economy? It's not that hard to find out. We know the mortgage brokers who produced the junk mortgages, we know the companies who packaged and sold them, and we know the rating agencies who mis-rated them. It's not all that many people, really. And, I bet most of them are doing really well right now. After all, they were the ones "in the know". They wouldn't be crazy enough to invest in the kind of junk they were producing or selling. While millions of unsuspecting citizens like the Good Witch's friend have seen their savings or retirements melt down, the majority of the perpetrators are likely living large. Why are we not raising hell?

Nobody can convince me that the heads of these banks, like Washington Mutual and Wachovia, didn't know their lending practices were way, way out of bounds. Nobody can convince me that sellers of these debt packages, like Lehman Brothers, didn't know they could be time bombs. And, I've seen evidence that government regulators knew the danger posed by the housing bubble and the junk debts. The only conclusion is that government can't go after the bad guys because government was a major enabler...government just watched this real estate debt train careen down the tracks, and government collected plenty of tax revenue on transactions with no real substance. I'm outraged!

There is no way to put Humpty Dumpty back together again. The economy is in a shambles, and it will be awhile until it turns around. Lots of people will suffer a lot because of the greed and inaction I've described above. But, doesn't it seem strange that our elected representatives are not crying out for the scalps of those who did this to all of us? Doesn't it seem strange that the heads of most financial institutions who made terrible decisions are still in their jobs? It seems to me that somewhere in our millions of pages of federal laws, there ought to be a few that would apply to the scum whose greed put us in this giant pickle. Where the heck is a good lawyer when you really need one?

Musings on the Inauguration

Watching the inauguration today, I couldn't help but think back to when I stood in front of the capital in 2004, protesting the Iraq war. Thousands (only) of us bussed to Washington in the night, arriving early in the morning and then taking the subway into the capital. We protested for a few hours, listened to speeches by all the usual suspects, had a beer and a sandwich at a nice local eatery, and then started out on the long way home. It was a long and hard day, but I felt I had to have my say in the only place where my opinion might make a difference. I did have my say, but I didn't make a difference. Being right didn't count much when Bush and Cheney held the power.

Today, I was not in front of the capital but in front of my TV, enjoying every aspect of the formal inauguration ceremony: Rick Warren, the quartet, the poet and her wonderful poem, Aretha Franklin, the botched oath (hilarious!), Obama's down-to-earth but powerful and inspiring speech, and Rev. Lowery's poignant benediction. I give the event a 9.9! So what if the security was incapable of moving enough people into viewing position...this event was just too big to manage.

I just watched a clip of Obama's walk down Constitution Avenue with Michelle. Yes, maybe it was not the smartest thing, but it made a statement about courage and about accessibility. For the next few years, Obama will need to be close to the people in order to keep their faith and trust during hard times. He'll also need their support to keep the congress (representatives of the special interests) in line. There will be some danger in that, as well.

Obama was gracious to his predecessor, a man who will have to live with his disgrace until he dies. Bush was a man apparently oblivious to his inability to comprehend the requirements of his job. He's said that he'll let history judge him; it will be brutal. Already the European press has administered the coup de gras! I will never be able to forgive him or his behind-the-scenes masters for the carnage they inflicted on our country and the world. But at last Bush's power is gone, and good riddance!

The next few years are going to be really tough. It will be worse, maybe much worse, before it gets better. The level of sacrifice required of Americans will be far greater than most can imagine. But, the forces of progress cannot be impeded for too long. Perhaps a major adjustment in our way of life is in store for us, which would not be all bad: our culture has got too attached to having things with little true value. I can't wait to hear Obama's call for us to get our heads on straight in many aspects of life, especially in the areas of people getting serious about education, civil behavior, and contributing to the common good. If anyone can use the bully pulpit to advantage, it's Barack. Good luck to you, young man! (I have one son older than Obama, and another who was 47 today).

As for me, I don't expect to make any more protest trips to Washington. I will spend my time trying to help Barack Obama and our country succeed. I'm just one person, but I will put my shoulder to the wheel, I will make sacrifices for the common good, and I will encourage others to do the same. I look forward to the challenge, for without challenge life is empty. Let's get busy, let's give Obama a chance, let's not pay attention to the nay-sayers and the bitter ones, and let's get the 21st century moving in the right direction again. If not us, who?

Increase the Fuel Tax

There's no doubt about it. We decide on a day to day basis what is best for us. When things we want are less expensive, we buy or use more of them. When things get more expensive, we use less of them and switch our preferences to good things that are relatively cheaper. This concept is called "marginal utility", if my memory of economics is correct.

Gasoline is now much cheaper than it was six months ago. Six months ago we rationed our travel, stepped lightly on the gas pedal, and dreamed of owning a Prius (but nobody had any to sell). Now, Toyota dealers have 56 days of supply and we hop in the car at the slightest provocation.

Six months ago everyone was talking about alternative energy, and investments in it were booming. Now, there's a big question regarding whether alternative energy can be cost-competitive with oil. Windmill farms and solar arrays may be planned, but will they be built? Not as long as oil is cheaper than their output.

So, we need to change the cost equasion so that that the price of oil doesn't go through the roof again. The way to do that is to replace the need for energy from oil by producing energy from alternative sources. But how will the investment in alternative energy be funded if private investment dries up? A fuel tax increase makes the most sense, say many economists. I agree.

We should start by raising the federal tax on motor fuels by $.50 per gallon, with the revenue going into construction of proven alternative energy sources and utilities such as solar arrays, windmill farms, and transmission lines. The government would own the constructed items and bid out their operation to private companies. When the price of oil rises (and it will), to the point where these items have a value greater than their cost, the government should put them up for bid and sell them.

This rather painful tax would have several positive effects. First, it would reduce current consumption, thereby tending to keep the price of oil lower than it would have been and reducing carbon emissions. Second, it would enable construction of alternative sources at a time when the economy needs to generate jobs. Third, when the new sources came on line, they would put downward pressure on the price of oil. Fourth, the alternative energy would provide some additional security when oil prices rise significantly or oil supplies are threatened. Lastly, these sources would provide new clean electrical power to fuel the new generation of plug-in hybrid vehicles.

If an additional fuel tax is proposed, be "selfish" - support it! It's one more step toward energy independence and a stick in the eye of global warming.

Looking Way Back to November 4th

Wow! It seems like a long time since that black guy won 365 electoral votes and the presidency. The rough and tumble of politics is a daily thing, so the guy who is not even president yet seems like someone we've known for a long time. People of all stripes are already sniping at him. What a job! Fortunately, Obama seems up to it. We'll see.

Back home, we got a new democrat in our congressional district - Eric Massa, a really bright ex-Navy officer who beat a rural republican lawyer for the job. Massa, who seemed like a very pragmatic guy when I met him on his first try for the job, has now become a full-fledged northern liberal democrat who can't say anything bad about a union, even though the public employee and teachers unions have ruined New York. There is a litmus test, no question about it. I'm hoping Obama has more backbone. But don't get me wrong...I like unions until they become more important than the companies or governments that they supposedly work for.

My Obama t-shirt came in the mail the other day. I'm still in his court. I like his rather centrist cabinet and his choices for other key positions. We need smart people who can get things done, more than we need ideologues from the right or the left. The latter provide a conscience, the former do the work. And I'm happy that the Obama kids are in a famous private school instead of the crappy schools of Washington, DC. Maybe someday the rich will not have to make such choices, but that day is far off.

But most of all, I'm happy that John McCain (the Impetuous) and Sarah Palin (the Clueless) are not leading us. Already the new president will have to deal with a middle east in chaos and an economy in shambles. Who knows what perils lie ahead? We need cool and smart people in charge if we are to weather the storm of the next couple years. I've learned that even the best leaders should be overjoyed if 75% of their decisions turn out to be right, so we can't expect perfection. With McCain and Palin, my guess is that somebody other than either of them would already be running the country from the sidelines...and that somebody would be a right-wing nutcase and his buddies. You know what that would result in, since we've had that for eight long years.

Obama should have his chance to lead. Congressional leadership, even during the past few weeks, has again proved its ineptness. For example, congress passed the bailout program and is now bitching constantly about "what happened to the $700 billion". Well, they passed the law! Whatever happened, happened on their watch. If they were smarter than Paulson, they should have come up with their own plan. Frankly, when times are at their worst, strong leaders are needed the most. Committees never won a battle.

Since I'm roving all over the place tonight, I'll just finish with my latest concept proposal. Our departing president will be building his own library before too long, funded by all the war profiteers and oil magnates that prospered during his disastrous term. Given the sack of shit that he's left on almost every American porch, we should honor him with what he really deserves - a Bush memorial library funded by average Americans. This library would have the goal of collecting and evaluating every tidbit of information about his background and his blunders, so that he is never forgotten and Americans can forever learn from him "how not to govern". Where can I send my contribution?

Israel!

So, you thought I was going to beat up on Israel for its beating up on Hamas? Not me. I've given up. There's no use losing sleep over people who will never change their ways - and that's both Israel and its bitter enemies. It's a fight to the death, and this is just another skirmish on the way.

In my view, the only way this will ever end is for Israel to tell its Arab neighbors that Armageddon is here: "fix our security permanently or we are going to go out with a bang and take you all with us!" That outcome is probably some years down the road, but I see it coming. In the meantime, there will be lots of these Israeli forays against those who provoke it repeatedly or in one-time successful operations.

Is this a good situation? No. Ugly. Can it be changed? No. Neither side will budge. Hamas (maybe) believes demographics and world opinion are on its side, but, then again, maybe these guys are just insanely certain that they can ultimatly win without losing everything. Israel will do whatever it takes to save itself, even to the extent of using its atomic weapons in a final act of vengeance.

The only solution? An imposed solution that neither party would be happy with. Perhaps the civilized world will, at some point, feel the danger is so great that such an imposition would be implemented.

There are lots of places where impositions sound good (Darfur, perhaps?), but none may be so important in the long run as in the middle east, where countries like Israel and Iran can cause chaos far beyond their normal stature in the world. Anyone want to bet how long it takes before this happens? It's Israel's only hope.

A Peaceful World

The news has been pretty rough lately. A bunch of guys trash Mumbai and kill lots of people, so India and Pakistan mobilize some armed forces. Rockets, jets, and ships send screaming hot metal into Israelis and Palestinians whose lives then end. Speedboats threaten ships in the Gulf of Aden, and some unlucky people are kidnapped for ransom. Russia threatens to turn off Ukraine's gas. It goes on and on. Will we ever have a peaceful world?

I heard an interesting discussion on NPR the other day. A former drug addict, who has written a book about accountability, rather convincingly made the case that people have no excuse for the adverse consequences of their own actions. She dispassionately tore apart the "victim-oriented" argument that some make - that, were it not for life experiences beyond an individual's control, the person would not have committed the destructive act. For example, the idea that a drunk driver who ran over a child is less accountable because he drank to excess because he had lost his job that day. Her argument was that such rationalization can ultimately eliminate accountability altogether. I agree.

One of the most powerful admonitions in the Bhagavad Gita is the instruction to make each decision based on the information immediately pertinent, and then go on without attachment to the results. In other words, to decide what action is likely to have the most "good" or "positive" result, and simply do it; repeat endlessly. This is accountability on steroids! Under this rule, almost any action is permitted under certain circumstances - even the action of killing someone - but selfish actions that generate a net "negative" consequence are proscribed. We're seeing far too many of the latter, these days. But in truth these days are just normal days in our imperfect world.

Recently I've been ruminating about the fabulous discoveries of our time, and about the discoveries that seem just around the corner. We routinely send people into space, we split and recombine genes, we communicate immediately with people around the world, and we collide protons at close to the speed of light just to see what's in the debris. If we can do all these things, why can't we make rapid progress toward creating a peaceful world? Isn't a peaceful world the dream of people everywhere? Perhaps the idea of accountability is the key to establishing some inertia in that direction.

I know what you're thinking...can this writer really be as naive as he sounds? Yes, and no. I believe, for example, that people make every decision based on what they think is best for them at the moment. The drunk driver, for example, made a conscious decision to get drunk in order to relieve the pain of losing his job. The dead Mumbai terrorist was committed to either exacting revenge or forwarding an agenda that would benefit his fundamentalist Muslim culture. Virtually every destructive act has been done by someone who saw it as a "positive", at least at the moment the deed was done. That's what needs to change.

One thing I like about Obama is his willingness to speak clearly about accountability, his willingness to set the bar high. That's what change is all about: setting a new standard and pushing through the obstacles that would nullify it. The baggage of history, the pernicious cancer of selfishness, and the often daunting complexity of evaluating competing "positives" stand firmly in the way of our achieving a peaceful world. Yet, at this beginning of another year, I hope that Obama and each of us will do our part to explain the world as it is in each moment, to perform or support the immediate actions which forward the "good", and thereby take us step by step closer to a peaceful world.

Hunkering Down

The stock market may be making some positive noises right now, but 2009 looks like a year of hunkering down. Those who have a secure job should be praying their thanks every morning and night. Many are suffering, and it's going to be awhile before smiles are the norm for most people.

One of my sons, a very competent guy, is going to be out of a job soon. That's the price of working in Michigan these days. Fortunately for him, he's marketable. For most in his locale, the outlook is grim.

Some people still have cash. Contributions to my volunteer ambulance corps in a wealthy suburb have far exceeded my expectations. Lots of wealthy people are also good people, contrary to some popular wisdom.

I'm doing some paring of non-essentials for 2009, since my IRA is still down over 20% from last year. And yes, I say thank-you morning and night for the privilege of not having to worry.

I took a whirlwind trip this week to North Carolina where I and my four younger siblings spent time together as a group with my 87 year old mother. First time in many years for a group love fest! Mom is perky, very healthy, and painting up a storm. Everyone should hope for such a wonderful autumn of life.

Since I do financial work for a bunch of non-profits, December and January are months from hell. Pardon my stress! Got to get some exercise during the short interludes of not being crazy!

Did two ambulance calls this afternoon...unhealthy people get old fast, and younger people can lose their health for purely psychological reasons. Lots of people could get a good education in life by spending a few hundred hours on an ambulance crew.

Life is short at best. Eternity is a long, long time. I'm betting on God. If I'm smart enough to comprehend the creator, perhaps the creator is kind enough to let me have a bit more information about what this was all about. You've got to admit the universe and everything in it is pretty amazing.

All the best to you and everyone! Let's hope that Rodney King's plea gets a bit more action in 2009.

Lutherans Rule Christmas!

One of my favorite things about Christmas day is the afternoon entertainment on public television, a procession of musical programs by Lutheran Colleges - St. Olaf's, Luther, and Concordia - although it wouldn't be fair not to mention the Mormon Tabernacle Choir's awesome program during the same time slot.

I love to sing, and I sing bass in our church choir. The Eastman School of Music is in Rochester, so I have year-long opportunities to indulge in hearing excellent choral, orchestral, and instrumental music. That's why I'm so impressed by these three Lutheran colleges; their music "competes" at an extremely high level, and they're just "kids". Musically, they are pro's.

I hear voices in these choirs that could audition successfully at Eastman (or Julliard). But they are not at Eastman or Julliard, they are at St. Olaf's, Luther, or Concordia. Student of practical economics that I am, I conclude there is something about these places that many high quality musicians value over the prestige and excellence of a top-rung school like Eastman.

That high value "something" may be not having to practice roughly seven hours every day, as Eastman kids do. But it's more likely that the nurturing cultural and spiritual element, and the tradition of these colleges is what draws them. I don't know for sure, but I'd also be willing to bet that many of these students have had generations of their family graduating from these institutions. A tradition of excellence breeds excellence.

So thank you, Lutherans, for being so serious about making beautiful music. I suppose it may emanate from the German origin of Lutheranism - the Germans love music and have always put great emphasis on precision and clarity. It's too bad these colleges don't have programs for all the other holidays - I'd watch and listen.

At this time of year I'm reminded that Martin Luther wrote the famous carol, "Away in a Manger", setting the tone for his followers. Martin, you are probably looking down on this Christmas with satisfaction, hearing the angel choirs of the Lutheran colleges you inspired!

(Postscript 12/27/08 - A loyal reader has pointed out that the attribution of "Away in a Manger" to Martin Luther is incorrect. The song was attributed to him 400 years after his birth as a way of according him some additional glory. However, Luther did write a number of carols - just not this one. Truth must prevail!)

"Global Warming" Suspended in Rochester, NY!

Just when we Rochesterians were well on our way to the least snowy Oct/Nov/Dec in many years, Mother Nature decided to remind us about who is really in charge. So, I was forced to make the difficult transtion from a weekend in San Diego to a weekend at the southern reaches of the north pole, currently in Rochester.



It's times like this when I bow down and praise the guy who invented the snow blower! It truly saves a person from hours of back-breaking labor and the agony that follows.

On the other hand, the snow is beautiful and I don't mind the cold. As far as I know, the awful roads didn't cause any fatalities - only lots of fender-benders. We had nine calls at Pittsford Ambulance, and thankfully no major heart attacks when our ambulances were having much difficulty fighting through clogged traffic.

The skiiers are in heaven. You see, God provides for all of us at different times! Merry Christmas!

A New Man

If you've read me for awhile, you know about the angst I felt when my #1 grandson enlisted in the Marines. Although he had excellent high school grades and test scores, he just couldn't seem to take the next step. Each time he moved that right foot toward a new opportunity, he soon pulled it back. His life was in a holding pattern for an entire year - and then he announced he'd enlisted and intended to be a combat soldier. Surprise, surprise!

Times have changed since I was a soldier. Now, the Marines make you wait for a few months before you report for duty. In the intervening period they expect you to attend pre-reporting training sessions with your recruiter and others. They expect you to get into shape. They give you some idea of what being "screamed at" is like. Then you jump into the real fire. Michael reported about 12 weeks ago to the Marine training base in San Diego, and his transformation began abruptly - no doubt with someone yelling unintelligible words in his face and calling for pushups at every turn.

Mike's first letter, after three weeks there, opened "I hate boot camp!" The second letter, after six weeks there, opened "I love boot camp!" He miraculously recovered from a bout with pnuemonia, earned an expert marksman badge, and finally completed the grueling three-day exercise aptly named "The Crucible". Then came graduation day, which I attended last weekend.

Mike is a new man. He stands tall rather than slouching. He looks you in the eye when he talks to you. He speaks with confidence. His skinny frame is 15 pounds heavier than it was 12 weeks ago in spite of the pneumonia and constant exercise (they put him on double rations for awhile). He's still "young", but a very different kind of young. In the picture, you can see the implacable Marine expression on his face. I like that a lot.

After two weeks of leave and two weeks of assisting a recruiter, Mike will be back to Camp Pendleton for nine weeks of infantry combat training. He'll come out of that a trained warrior, although he will have no idea of what real combat entails. That may come later, and if so, he'll find out that there's no glory in it. It's chaos, fear, suffering, and an aftermath that goes on and on. Hopefully, he'll be able to get through whatever comes.

In the meantime, Marine boot camp graduation is a major production. These Marines look sharper and drill sharper than any of the services. You can sense the individual and group pride that will help them succeed in the small unit combat role they perform. Mike and 450 others became "new men" last weekend, courtesy of the United States Marines.

Power and Greed, II

A few days ago I wrote about a small group of people whose raison d'etre is accumulating power and wealth by whatever means they can get away with. They are smart, and they generally weigh their decisions carefully, but they are also ruthless. Most of us have never been close enough to people like this to really understand the depth of their lack of principle; they are sociopaths, and they know how to fit into society and manipulate people and organizations to achieve their ends. They are responsible for a lot of the pain in the world.

Since I wrote those words, three more people who seem to meet this description have been exposed. Illinois governor Blagojevich ran on an anti-corruption platform but is now accused of attempting to sell whatever an appointment to the U.S. Senate. Bernard Madoff, the former chairman of NASDAQ, has been arrested for masterminding a Ponzi scheme that may have cost investors a mind-boggling $50 billion. Marc Dreier, a well-know New York City attorney, has been arrested for allegedly defrauding several hedge funds of up to $380 million. They are three very smart and capable people who have likely caused incredible chaos by taking huge risks to accumulate power and wealth.

During the past week I've heard several financial experts claim that regulation can't keep up with the evil creativity of those who are driven to "succeed" at whatever cost. They may be right. But, why aren't the big-time con artists exposed more quickly? I suspect these people succeed largely because their "customers" fail to exercise due diligence when doing business with them. Their personal magnetism or pedigree is such that their proposals are not checked out appropriately for transations of the magnitude they deal in. And, they are not afraid to intimidate or ridicule people who may obstruct their plans. Consequently, one successful fraud serves as the base for the next, by increasing the perpetrator's power and wealth.

You have probably heard the word "transparency" often, lately. It means that the purposes and details of agreements or transactions should be completely disclosed to those who are affected by them. Government officials and corporate managements, in particular, are being encouraged to be more "transparent" because they can often gain unfairly by keeping their purposes and transaction details secret. In some instances, such as in the selection of an appointed senator or the awarding of a major contract, transparency before the act is impractical but a requirement to keep detailed records and submit to post-review may provide adequate oversight.

The primary objection to transparency is that it "slows the process" by creating unnecessary work before and after transactions. In my view, this argument usually comes from prime movers who hate the idea that outsiders would have some power over them. We should be sceptical. Hampering those who might sell senate seats, bilk people out of $50 billion or $380 million, or invest a bank's capital in ultra-risky morgages seems more reasonable every day.

Greetings from San Diego!

The palm trees are swaying gently in the wind. The wind feels warm to me, but others here are wearing light jackets. The early morning clouds and rising sun make for a beautiful sky. It's just another balmy day in San Diego, where I've come to witness my #1 grandson's graduation from Marine boot camp.

Michael gained fifteen pounds, learned how to stand up straight and sit up straight, and how to look you in the eye when he talks to you. He's quite a different young man than he was eleven weeks ago, as I expected. All the young graduates look alert and sharp, very different than their civilian counterparts at this age. Many, many years of Marine experience in transforming kids into obedient soldiers is obviously effective.

I'm here with my #1 son, Michael's father. He's proud of Michael, although one year ago he wouldn't have guessed he'd be here to witness this kind of event. Kids do what kids do, and parents must stand aside and love them as they work out their lives. I think this experience will probably work out very well for Michael, adding some self dicipline and drive to his high intelligence. Time will tell.

Seeing and conversing with the Marine officers and sergeants takes me back to my youth in the 101st Airborne Division. These men are bright and motivated, and very sharp. They are more than a match for typical civilians in their age group. We Americans are fortunate to have armed forces filled with men and women of such quality.

Keep you posted!

Power and Greed

Here we are, hoping the government can somehow pull us out of this deep recession. We're so concerned about the present and the future, we don't think much about the recent past. It's the past, after all. But I've been thinking about how we got to this sorry state, and the answer is "power and greed". Nothing new. Over history, this combination of human drivers has caused more misery than the bubonic plague.

There are some people who are wired differently than most, or they get rewired through their life experiences. They love the feeling of control over others, and they will do anything they can get away with to establish that control. They also love the material trappings of success. The old saw about "What separates the men from the boys is the cost of their toys" is their mantra. These are the people who are primarily responsible for our economy being in tatters.

Looking back at the American financial system, we see a complex matrix of "credit default swaps", "hedge funds", and "nothing-down, no-credit-check, adjustable rate mortgages". Lots of these transactions had little more substance than air, or were simply another way to gamble. Yet the people who invented them, or approved them, or marketed them, or failed to regulate them, were generally very smart people. They knew better; they understood the potential for disaster if the value of these transactions reached a critical mass. So, why did they proceed? Simple. Power and greed. The short term success they achieved gave them great influence, and their large profits enabled plenty of flashy homes and toys. They acted rationally, for them.

The "free-market" zealots just don't understand the risk this small group of talented people presents. Although capitalism seems to be the best way we currently know to achieve innovation and productivity, unfettered capitalism provides the "power and greed" crowd with all the room they need to produce chaos. These people are willing to cross the lines of generally acceptable behavior if they feel they can gain an advantage by doing so. In a worst case scenario, you get a Hitler. In a more typical case, you get the guys who pushed Washington Mutual and Lehman Brothers off the cliff. If you were generous, you'd call them "unprincipled".

I've been up close and personal with members of this crowd. I've seen them make alliances with others of like mind in a large corporation. When they achieved the critical mass they needed, they simply broke the rules they all understood in order to cash in. To add insult to injury, they rigged their company's liablility insurance so that it had to pay the fines they ultimately got charged by regulators. All of them are mighty comfortable right now, their reputations ruined but their fortunes intact. They won the game.

When you hear someone say "Regulation stifles innovation", you can safely respond that "Lack of regulation creates human disasters". The trick with regulation is to get the level right. But, never forget, the "power and greed" crowd is always lurking close by, just waiting to find the chinks in the laws and rules that we depend on to make our society fairly predictable. Better to err on the side of caution.