The US Today: What Happens When You Let Investment Bankers Run a Country
Investment
banking as an industry runs almost completely contrary to wealth creation since
it thrives on fees rather that capital appreciation. Investment banking
is about making DEALS (any deals) regardless of whether the deals make sense or
benefit both parties (after all, the advisors to the deals, the investment
bankers, get paid based on commission and free stock).
Indeed,
investment banking is one of the few industries on the planet in which you can
get rich by creating debt for others to pay off. Goldman Sachs, as you know, is
an investment bank. And this financial crisis is riddled with former Goldman
Sachs and other Wall Street execs.
Indeed, you
can see the “investment banking” stamp everywhere. Consider the major deals the Feds have created and consider
the actual benefit they offer to the parties involved:
§ Bear
Stearns/ JP Morgan§ The
US taxpayer/ Fannie Mae and Freddie Mac§ The
US taxpayer/ AIG (and all of its counterparties)§ Merrill
Lynch/ Bank of America
All of these
deals were terrible. All of them were rushed through. And all of them were
allowed because of lax regulation/ poor analysis. To this day no one in the
mainstream media seems to have adequately analyzed these deals in a way that
includes actual numbers. Instead we get dopey adages like “it’s about stemming
the tide,” it’s important to “stop the bleeding,” “it’s about saving the
system.”
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