What is the favorite "pastime" of many investment bankers. Is it Golf? Tennis? Squash? Working out? NO. In a surprising number of instances it is BRIDGE.
And what do these people learn how to do in this game? They learn to BLUFF. BLUFF. BLUFF.
That is what happened to poor Tim Geithner and Ben Bernanke. They were supremely bluffed. While both are very bright and certainly well intentioned they got into a massive game of bluffing played by the great masters of all time. And with steady, brutal efficiency the masters from Goldman Sachs both present and past eliminated their competition with bluffs both brilliantly constructed and played - competition not quite as skilled as they were. And with many of the people in control from Goldman it was possible to destroy firms that had been around for decades. Sure 350,000,000 Americans will have to pay for this, but so what? It is the game that counts. The greatest bluff of all time has stripped about $130,000 each from the accounts of all Americans. And the best part of the bluff is that the Goldman partners will continue to be paid just as much as they ever were. It is something that will be studied in history classes 400 years from now. How could less than 10 people bluff the leaders of the greatest country in the world into destroying their competition by persuading them to think our way of life was as risk when it was absolutely not. WOW.
Make no mistake -the hatred - revulsion - investment bankers have for each other is deep and rich. Everyday they are asked to do the impossible using vast amounts of money to take insane risks they are driven to by their need to best their fellow bankers. Do you think those feeling just "go away" when one becomes a government official. No, those memories and feelings are embedded permanently in the conscious and sub conscious. When given the opportunity to destroy one's tormentors of 30, 40, 50 years, even the most "FAIR" man will succumb and vigorously plunge in the knife.
Now who is to blame? Whose fault is this? How can this be stopped from happening again? Our standard of living will drop. Our dollar with crater and the Chinese are now our new masters.
What to do?
Eliminate the leverage and tax profits made from leverage of over 2 to 1 at the 90% rate. This was all brought about by professional gamblers and bluffers who faced no downside for gambling with the stored wealth of the United States. They hired our best minds to play in their casino paying them vastly more than what they would have made as contributing members of our society.
AND, reduce the tax to 10% for people who are efficient managers of people who make things that benefit our society. Pay GOOD managers the most and celebrate their accomplishments. That is the hope of the United States right now.
And that is something that Congress can decide to do quite well. They can decide what those "things" are that are most worth building and creating and let us pray that it will not be the so called "financial instruments."
If they find a way to reward the very few brilliant managers we have in our country to build worthwhile products we will all benefit. The key to our future is to turn these splendid minds toward the same things that made our country great in the 19th century with out sized rewards and to punish with confiscatory taxes those same great minds who remain addicted to gambling.
And this is what we need our Congress for right now. It is a worthwhile debate and a profoundly important mission.
To close you should know that one of the greatest bridge players is Warren Buffet and God Bless his soul he has been complaining about the out sized fees of bankers for over 30 years. He probably sees what they have been up to better than anyone. And this is what makes Blankfein so brilliant - do you REALLY think he needed that money from Buffet at such insanely high rates? NO way. But what he DID need was Buffet's stamp of approval and to muzzle him from giving his opinion to his close friend, the President, and his favored news organizations. And so our greatest manager of the 20th century has had his lips sown shut with golden thread.
Neat. And 400 years from now it will be the stuff of endless PhD history dissertations - the greatest bluff of all time that resulted in China takng the lead in world affairs and our standard of living precipitously dropping.