Blinders Always On
Tomorrow is Nine-Fifteen, the infamous date generally cited to commemorate the implosion of the mighty twin towers Lehman Bros. and Merrill Lynch. It is indeed the one-year anniversary of the financial equivalent of Nine-Eleven.
Thing is, very few people pay much attention to it, relatively. I say relatively because there are a number of financial watchers who know about it, know about its impact. Tonight on the Nightly Business Report it was discussed at length, and one of those offering his thoughts was Alan Blinder, former vice-chair of the Federal Reserve as well as former a lot of other schnazzy high-level economic/finance positions.
After being asked about the main lesson learned Blinder said (something to the effect--from the best of my recollection), "I can answer that with one word. Risk. Risk was woefully underappreciated." He then reeled off all the people who should've known better. "Risk was underappreciated by x, risk was underappreciated by y..." He went through at least a half-dozen culprits, as if he was reading us the FBI's Most Wanted list.
What is the deal with this thing, risk?
Most of the investor's considered risk has to do less with concerns about the inability to do a job and much more with fears of moral dissipation, but this is rarely every addressed. Who wants to call a liar anyone they're looking square in the face, particularly those with whom one must do business on a regular basis?
Some of the more easily exploited of them squeamishly worry, "I'm handing a lot of money to these people. I wonder, will they lie and cheat, and if so, how well will they do it?" Veteran value extractors have reached the pinnacle of their profession with the tested approach: "I know they will lie, and do it very well. My job is always figuring out how much I must add to my costs…"
The fact that Blinder says that risk was underappreciated is only an indictment of all who swim in the sewage of habitual value extraction--everyone: debtors and creditors, investors and entrepreneurs, bankers and regulators, young taxpayers and old pension-drawers, penthouse corporate executives and penthouse window washers--all of them.
World consideration of risk is the very nourishment for human sacrifice. Whenever you hear it brought up the Artisans of Deception are right there to feed the echo chamber heaping servings of
"Whupp, there's always risk and you just gotta find a way to insure against it" (I'm making sure I get my cut the next time Goldman Sachs sacrifices millions of taxpayers on the AIG altar.)
"You can't trust anyone so look out for yourself no matter how brutal that is" (There's got to be another Bernie Madoff to secure my retirement, someone who'll be just a bit more honest.)
And oh yes, almost forgot, "Good thing there's Barack Obama to look like he's in charge of things" (You go feds, you go after those evil Swiss bank account holders and make-them-pay-their-fair-share-dammit!)
There are only two ways of assessing the value of things. The World way and the Kingdom way.
In the World millions of Alan Blinders (quite the appropriate name) bonk into everything underappreciating how much people lie to get more from their human sacrifice. Quite blindly they believe if they just lie better they'll get more from their sacrifices than the other guy. Many do, by the millions of dollars -- but... for what?...
Those in the Kingdom ask: Why is there any risk at all to begin with?
Even better, what is it about any given individual from which I may accurately assess their risk?
Really, what is the truth about how much any given individual can be trusted? I believe the answer is by one simple test. Is someone all about sacrificing others to gain more of the World for him or herself? Or is someone all about sacrificing him or herself so others may benefit? One is the typical value extractor, the other is the only one who can do actual value enhancement.
Furthermore, there is only one way an individual can be a genuine value enhancer.
Only One Way.
I address it a bit more in my latest webzine homepage essay. It is here.
Last year at this time I began a series of blog posts about the Nine-Fifteen implosion and its fallout. Those are compiled here.
Thing is, very few people pay much attention to it, relatively. I say relatively because there are a number of financial watchers who know about it, know about its impact. Tonight on the Nightly Business Report it was discussed at length, and one of those offering his thoughts was Alan Blinder, former vice-chair of the Federal Reserve as well as former a lot of other schnazzy high-level economic/finance positions.
After being asked about the main lesson learned Blinder said (something to the effect--from the best of my recollection), "I can answer that with one word. Risk. Risk was woefully underappreciated." He then reeled off all the people who should've known better. "Risk was underappreciated by x, risk was underappreciated by y..." He went through at least a half-dozen culprits, as if he was reading us the FBI's Most Wanted list.
What is the deal with this thing, risk?
Most of the investor's considered risk has to do less with concerns about the inability to do a job and much more with fears of moral dissipation, but this is rarely every addressed. Who wants to call a liar anyone they're looking square in the face, particularly those with whom one must do business on a regular basis?
Some of the more easily exploited of them squeamishly worry, "I'm handing a lot of money to these people. I wonder, will they lie and cheat, and if so, how well will they do it?" Veteran value extractors have reached the pinnacle of their profession with the tested approach: "I know they will lie, and do it very well. My job is always figuring out how much I must add to my costs…"
The fact that Blinder says that risk was underappreciated is only an indictment of all who swim in the sewage of habitual value extraction--everyone: debtors and creditors, investors and entrepreneurs, bankers and regulators, young taxpayers and old pension-drawers, penthouse corporate executives and penthouse window washers--all of them.
World consideration of risk is the very nourishment for human sacrifice. Whenever you hear it brought up the Artisans of Deception are right there to feed the echo chamber heaping servings of
"Whupp, there's always risk and you just gotta find a way to insure against it" (I'm making sure I get my cut the next time Goldman Sachs sacrifices millions of taxpayers on the AIG altar.)
"You can't trust anyone so look out for yourself no matter how brutal that is" (There's got to be another Bernie Madoff to secure my retirement, someone who'll be just a bit more honest.)
And oh yes, almost forgot, "Good thing there's Barack Obama to look like he's in charge of things" (You go feds, you go after those evil Swiss bank account holders and make-them-pay-their-fair-share-dammit!)
There are only two ways of assessing the value of things. The World way and the Kingdom way.
In the World millions of Alan Blinders (quite the appropriate name) bonk into everything underappreciating how much people lie to get more from their human sacrifice. Quite blindly they believe if they just lie better they'll get more from their sacrifices than the other guy. Many do, by the millions of dollars -- but... for what?...
Those in the Kingdom ask: Why is there any risk at all to begin with?
Even better, what is it about any given individual from which I may accurately assess their risk?
Really, what is the truth about how much any given individual can be trusted? I believe the answer is by one simple test. Is someone all about sacrificing others to gain more of the World for him or herself? Or is someone all about sacrificing him or herself so others may benefit? One is the typical value extractor, the other is the only one who can do actual value enhancement.
Furthermore, there is only one way an individual can be a genuine value enhancer.
Only One Way.
I address it a bit more in my latest webzine homepage essay. It is here.
Last year at this time I began a series of blog posts about the Nine-Fifteen implosion and its fallout. Those are compiled here.
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