Spero Consulting

Posts Tagged ‘Faust’

Or – to seri­ously mix our metaphors – falling head-​over-​heels for the wolves’ claims that the “sky is falling.”

Our favorite line from the play and movie, A Man for All Sea­sons, is Saint Thomas More’s state­ment at his trial in which he gen­tly belit­tles one of his per­jur­ing accusers, Richie Rich:

“Why Richard, it prof­its a man noth­ing to give his soul for the whole world…Ahh, but for Wales?”

Mr. Rich received an appoint­ment from Henry VIII in Wales for his efforts.

After per­form­ing a short and cur­sory search of the web, we’re not sure – and it seems that no one else is, either – as to whether the mar­tyred Saint actu­ally made that statement, or whether it is an apoc­ryphally placed by the play­wright, Robert Bolt.

Nonethe­less, it so beau­ti­fully expresses the wry, amused, and con­sid­ered insight of a thought­ful, yet con­demned, man, who by quot­ing scrip­ture (Mark, 8:36), makes clears Rich’s Faus­t­ian bar­gain, and for what?

The Scared: We have been reminded of that 16^th cen­tury, court­room scene sev­eral times dur­ing the past sev­eral weeks, includ­ing today when we read Kim Strassel’s poorly-​reasoned, col­umn on in today’s WSJ, What Lead­er­ship Looks Like, and yes­ter­day, when we read The Wall Street Jour­nal’s edi­to­r­ial, enti­tled, “Free AIG.”

Yes­ter­day, the Journal’s the edi­to­r­ial staff seemed to regain – at least tem­porar­ily – their free-​market prin­ci­ples long enough to crit­i­cize the Fed­eral Reserve’s seizure of AIG in mid-​September. Unfor­tu­nately, the edi­tors have failed to take that same logic and apply it to the larger finan­cial cri­sis, as does Ms. Strassel and her subject, Congressman Paul Ryan.

Indeed, while claim­ing to be for “free mar­kets and free peo­ple,” they seemed awfully will­ing to for­sake it for a smidgen of a promise security.

Reg­u­lar read­ers know that we’re morally opposed to the plan for sev­eral rea­sons, includ­ing that trade-​off of free­dom for secu­rity and our doubts that it is nec­es­sary despite the many, many pleas of exi­gent cir­cum­stances, falling skies, and wolves.

Furthermore, as we have writ­ten exten­sively dur­ing the past two weeks, we believe that there are harm­ful imme­di­ate and long-​term impli­ca­tions of the bailout and that it will fail. 

So, the promised secu­rity and sta­bil­ity will be illu­sory – a mirage, per­haps – as all such promises have been since at least the takeover of Bear Stearns in the early Spring. See any of these recent posts: The Finan­cial Bailout, Reverse Auc­tions and Mark­ing to “Mar­ket”; Moral Haz­ard and Another Prob­lem with Illiq­uid Assets; If ‘If’s and ‘But’s Were Candy and Nuts…(#2); Big­ger Is Not Nec­es­sar­ily Bet­ter; OMG! OMG! OMG! Largest US Bank Fail­ure Ever!; The Cri­sis and Free Mar­ket Crit­ics; The Uncer­tain Value of Mort­gage Secu­ri­ties; Sorry Mr. Bush, We Respect­fully Dis­agree; Could a “Bailout” Pro­long the Finan­cial Cri­sis?; Idio­syn­cratic and Con­cen­tra­tion Risk, Again.; and Pub­lic Bailout? Why Rush or Do It at All?. (Actu­ally most every­thing we’ve writ­ten dur­ing the past two weeks.)

In that regard, we have pro­posed our own privately-​oriented, market-​based plan, A Bet­ter Solu­tion (than a gov­ern­ment takeover), that requires only a few small changes in the tax laws to imple­ment. It is sim­i­lar to allow­ing accel­er­ated – well, imme­di­ate – depre­ci­a­tion of the cost or an invest­ment tax credit to the prospec­tive pur­chasers of cer­tain mort­gages and MBS and CDS issues. (Note: the cur­rent bill pro­vides invest­ment tax cred­its for risky R&D but not risky mort­gages. Does that make any sense?)

The Scary: In addi­tion, we ask the dear reader to con­sider this: if the cur­rent plan fails to alle­vi­ate the pan­ics, can he or she imag­ine how far the gov­ern­ment will fur­ther over­step its author­ity to solve what will then be a pro­longed cri­sis REQUIRING addi­tional gov­ern­men­tal inter­ven­tion, or have sup­port­ers not con­sid­ered that prospect?

The Sorry: Think­ing of the illu­sory nature of many such bar­gains and trade-​offs made us won­der about the indi­vid­u­als – exec­u­tives, reg­u­la­tors, and employ­ees – who “cut cor­ners,” turned a “blind eye,” or just went along with some­thing in which they didn’t believe…in hopes of gain­ing the world or per­haps just a small bit, say, a lit­tle cor­ner of Wales or Long Island.

In the process, not only did they bear high per­sonal costs, but in many cases, the gains, e.g., the value of their stock grants or their new titles, turned out to be illu­sory. (Cromwell was guil­lotined a few years later, too.)

We sym­pa­thize with them – not the amoral ones; they don’t care and would only mock our sym­pa­thy. No, we mean the folks with con­sciences, who knew right from wrong, but couldn’t resist and traded their decency (and in many cases their self-​worth) for the lure of a few dol­lars more or a lit­tle less aggra­va­tion. That near-​universal weak­ness is the rea­son that we and many oth­ers admire Sir Thomas, even if we can’t always emu­late him.

The Final Irony: All such sac­ri­fices (and gov­ern­ment direc­tives) are designed to lead one or one’s peo­ple to Utopia. By the way, who wrote that book?