Bad boy bankers are striking again. Greece, the cradle of democracy and the Olympics, is on the brink of financial catastrophe, and the same folks who did so much to create the Great Recession here in America are pushing the poor Greeks over the edge.
According to a New York Times story last week, the boys at Goldman Sachs, J.P. Morgan and a dozen other banks created an index “that enabled market players to bet on whether Greece and other European nations would go bust.” When someone happens to buy some credit-default swaps on this index, he is wagering that Greece will go bust. If Greece does, in fact, go down the financial tubes, the holder of the swaps rakes in the cash.
What’s worse is that all of this betting on the fall of Greece has made things tougher for the country. As the Times put it, “A result, some traders say, is a vicious circle. As banks and others rush into these swaps, the cost of insuring Greece’s debt rises. Alarmed by that bearish signal, bond investors then shun Greek bonds, making it harder for the country to borrow. That, in turn, adds to the anxiety — and the whole thing starts over again.”
So the boys at the big banks are betting on Greece’s failure, and their betting is increasing the possibility of that failure.
Which leads to me to a question: WHAT is the matter with these people?
If this were a movie, at this point, Jimmy Stewart would rise to his feet and in his inimitable everyman splutter, he’d talk about human decency and caring for your fellow man and how there are things more important that the almighty dollar. And everyone watching the movie would know he was right. Kind of makes you wonder if the bad boys in the banks’ back rooms have ever seen Mr. Smith Goes to Washington or It’s a Wonderful Life. If they did, they certainly did not get the message.
How could that be? How could a bunch of financial types bet on the downfall of an entire country and all the ensuing misery that would follow?
Because profits are more important to them than people. Besides, they’ll defend themselves, they’re not doing anything wrong. It’s not against any law or regulation to do what they are doing. They shouldn’t need laws or regulations to know that hurting people is not right.
But the bettors in the Greece situation are no worse than the idiots who created all the risky debt with mortgage-backed securities — all of the debt that exploded in autumn of 2008. Or their fellow bad boy bankers who issued lots of credit-default swaps in the American economy — worked out real well for AIG, didn’t it?
Those wagering on Greece’s fall are no worse than the investors who abused the American stock market prior to the creation to the SEC back in the 1920s. The lovely gentlemen who brought you the Great Depression.
I’m sure if I kept going back in history and continued to explore the financial history of other countries, what I’d see is lots of totally legal, moral malfeasance. Because there are always guys who care more about profits than people, guys who’ll do anything the law allows, no matter how hurtful it is to people.
And yet, even with all the evidence that these profit-grubbing folks abound, there are people in Corporate America (especially the financial services industry) and in Washington, who feel that we don’t need any more laws or regulations. The markets will self-police because fair competition is the best competition. That’s never proven true, but what the heck, let’s keep trying a failed philosophy.
Where’s Jimmy Stewart when we need him?