Last night's sleep was wonderful---- after a busy week, and in the deepest part of Rem sleep, I had a dream of one of those old Lone Ranger movies. It began as the stagecoach was rumbling along through the pass----you know the one that all the cowboy sets used to use----and the masked bandits rode furiously to the stagecoach below and after firing a couple of shots high in the air, the stagecoach stopped. Then the lead bandit said:
"There has been a terrible error------I need all your money."
As a parent, over the years from when the kids were young, one gets used to the little hold ups of life----from the small requests of pocket change for a candy bar, to the car on Saturday nights and yes some gas money and such----
Those are the little "hold ups" in life---and we are all used to them.
HOWEVER: When we come to institutions of public trust---like our airlines, public utilities, financial institutions, and health institutions, there was at one time the notion that in matters of public trust, one had an obligation not to bet the farm, but to do "no harm" as the first principle of conduct.
A deep nosedive landing might be faster, a wild option trade for a customer might be more fun, a challenging risky surgery might be more exciting etc, but the first principle was, during those days of yore, that in the matter of public trust, the first rule was--do no harm.
Thus----when I hear our President tell us that there has been a terrible loss of faith in our financial institutons, and this was caused by something that the Congress and the President just could do nothing about, but as a result---the most conservative of investors, the treasury bill investors, conservative bond investors, will lose their pension funds unless they hand over 700Billion dollars to the treasury---rather their kids will hand over double or triple that amount over the long term----it just makes me wonder.
The very FIRST item of discussion of EVERY banker or investment professional in making a deposit of funds for an investor is----their risk level. RISK LEVEL is the whole point of the "KNOW YOUR CUSTOMER RULE." In modern times, it has been fashionable to think that the purpose of the examination of WHO the customer is is to discover if there are any TERRORISTS among us. NOT. The purpose is to match the RISK with CUSTOMER---and traditionally brokers were subjected to JAIL for inappropriate investments for their clients. Very serious infraction.
For a government to tell seniors, conservative investors that there has been a terrible mistake and the customer or taxpayer has been investing in a wild and crazy investment----makes the RED flags come out and the Fraud Calvary begins the charge----the problem is that the cavalry has to ride and charge against the very people at the top of our trusted country. And in those cases, the Cavalry has a tendency to look to the side, to turn to PR, to turn to schmooze.
To bailout, without a change in the essential structure of many of these structured investments and a complete change in the transparency of the market---which is in the trillions of dollars---will mean that this "Hold Up" will happen again.
Count on it.
Where is the Lone Ranger when we need him?
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