Friday, March 21, 2008

A Fate Worse Than A Fate Worse Than Death

by Tom Bozzo

Cheers to Angry Bear's Cactus for pushing back against the meme that the near-wipeout of Bear Stearns shareholders means that there wasn't a bailout on. (For an example, hear Laurence Meyer in this NPR segment, which for the record starts with possibly the worst explanation ever of the origins of the present crisis from reporter Adam Davidson. [*])

On a maybe related note, I was scratching my head over the NYT editorial board's observation that:
[I]f the objective is to encourage prudent banking and keep Wall Street’s wizards from periodically driving financial markets over the cliff, it is imperative to devise a remuneration system for bankers that puts more of their skin in the game.
Oh really? Whether or not it was enough, Jimmy Cayne experienced a 9-figure paper loss last weekend. The LTCM partners' large share of the fund's equity didn't stop them from almost blowing up the markets.

*] See here for explanation. Also please keep in mind the cultural subtext of the "worst X ever" formulation.

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