The Twisted Logic of Economic 'Experts'

The Thieves' Guild

What do I think of when I think of our nation's capital - Washington D.C.? The word thieves quickly comes to mind. It doesn't matter the political party. Both political parties are filled with scoundrels.

There is a famous scene from Shakespeare's Romeo and Juliet. In the scene Romeo's friend, Mercutio, is stabbed by Juliet's cousin, Tybalt, and dies. As he is dying, Mercutio cries “A plague on both your houses”, meaning the feuding houses of Capulet and Montague. Just substitute Democrat and Republican for Capulet and Montague and you have my opinion on politicians.

This past week in our nation's capital, we saw what I would call a gathering of the American branch of the Thieves' Guild. For those of you not familiar with what a thieves' guild is, a thieves guild is a common feature of old-fashioned organized crime in various types of fiction.

An example would be Cervantes' short story Rinconete y Cortadillo which was set in 16^th century Seville, Spain. One common theme of these type of stories is that all thieves must join the thieves guild in order to practice their “profession”. Another common theme is that, as in any other profession, a young thief must start as an apprentice and slowly work his way to become a master thief.

This past week we saw the very experienced “master thieves”, which are called Congressmen in this country, lecturing to the “apprentice thieves”, which are called Wall Street bankers in this country. The “master thieves” were furious with the “apprentice thieves”. I think their outrage was due to their jealousy at how quickly the apprentices had mastered the art of thievery. The apprentices had outdone the master thieves in the outright brazenness and size of the theft of funds not only from American citizens, but people worldwide.

Little Erin in Wall Street-Land

The “apprentice thieves” had help, however. One of the dictionary definitions of an acolyte is as follows: one who attends or assists, a follower. The Wall Street “apprentice thieves” have been greatly aided in their massive global theft by their acolytes and apologists in the media, led by CNBC.

An example of this behavior was the Super Bowl Sunday morning appearance on NBC's Meet the Press by CNBC anchor and “star” Erin Burnett. This appearance by Erin Burnett gave a larger audience than normally would see her a chance to see how totally clueless this so-called expert really is.

In discussing the outlandish Wall Street bonuses, Erin Burnett said the following: “The taxpayer money isn't being taken and paid out in the form of bonuses. It goes in a separate pool, shall we say, a separate account for banks.”

All I can say is WOW! I bet she also believes that her payments into the Social Security system are kept safely until she retires in a locked vault with her name emblazoned on the vault. She doesn't seem to grasp the concept that the funds are all combined together into one vast pool of capital. I bet little Erin still believes in Santa Claus, the Easter Bunny, and the tooth fairy too!

In further defending Wall Street bonuses, Erin Burnett went on:

“If the three of us worked for a company, your guests, and I lost $10 billion but Steve (Forbes) over there, he made a billion dollars. So overall, the company actually loses money, but Steve (Forbes) went and did his darndest for that company and he made money. So should he be paid for his work? Many reasonable people (like Erin Burnett) would conclude, yes, he should be paid for that.”

Again, all I can say is WOW! I guess Erin Burnett would call me an “unreasonable” person. So be it. Her thinking is a prime example of the twisted logic that passes for normal on Wall Street.

Let's look at the real world where the rest of us live. Let's say there is an industrial company that makes widgets. The company has fallen on hard times (much like the banks) and must declare bankruptcy. Everyone loses, NO exceptions! They don't say - “Hey, you guys on widget assembly line Z have done such a great job that we're going to pay you anyways.”

Why should employees of Wall Street firms be treated any differently than someone working for a non-Wall Street company? But Wall Street and their apologists like Erin Burnett think that they are members of a privileged class, an aristocracy. This gets back to the point I mention in many of my articles – the arrogance and sense of entitlement that pervades Wall Street.

Of course, Little Erin in Wall Street-Land is far from alone at CNBC. Among others, there is Little Larry Kudlow who claims to be an economist, but one that still believes in fairy tales like Goldilocks. Hearing the nonsense that constantly spews from his mouth, is it any wonder that the economics profession is in such disrepute?

CNBC or a Book?

So instead of watching CNBC, I think I will re-read some books that I haven't read since I was a teenager. They are the adventures of Fafhrd and the Gray Mouser by Fritz Leiber. Many of the adventures take place in the city of Lankhmar.

Lankhmar is described as a populous city, rife with corruption, and it is decadent and squalid in roughly equal parts. The city is ruled by an overlord and a nobility. The Thieves' Guild is also highly influential.

For some reason, that description sounds vaguely familiar to me...

Disclosure: no positions

Comments

[MarvinMBA:]

When everything seems to be going all right, everybody is an expert and when its goes wrong were all dumb. This time were all wrong but the public had no insights on just how wrong we were. Things dropped so fast, you were broke before you caught your breath...like a storm going thru the financial system that left tremendous destruction to your nest egg and future. Its too late to cry over spilled milk...lets face it, the system is absolutely broke to its core and no fix has worked except more and more job loss and disappearing equity from real estate to 401's. What to do? Of course everyone has a solution....get out the Apple Cart and start selling apples on the street. WERE IN A DEPRESSION!!!!!!!!!!!!... MBA

Feb 18 10:57 AM

[Ferdinand E...:]

Wall Streeters think that they are members of a privileged class, an aristocracy, or so you say. Well Tony, they think that because that is exactly what many of them are. They were standing in the right line when the brains were passed out, and after they got theirs the right persons told them what to do with their 'smarts'.

I've taught hundreds - maybe thousands - of finance students. Occasionally I bump into one of them, and judging from the smiles on their faces I get the impression that for the most part they are relaxing and waiting for the next upturn. Of course, my students were special - special in that they had me as a teacher. I explained to them that before they learned the details of finance theory, they should concentrate on how to impress people who gan give them jobs and money and 'things'.

Feb 19 08:55 AM

[shootpar2001:]

You seem surprised that a media outlet would bring on it's own commentator and call them an expert. You obviously do not understand the principles of osmosis; in this case, if I stand next to or interview true market participants or managers.... I will absorb their mental acquity for investment literacy. I then can go forth on another network affliate and expose my 'expert' opinion.
You can still watch (listen) to CNBC; you just have to wait for the true managers and money makers (Gross and others).
Lastly, this is just the continuation of what the "old" stream media has been doing on their news broadcasts for decades.

Feb 19 11:03 AM

[notsosmart:]

all the idiots just covering for each other. goldilocks is sowing mustard seeds.LOL.all the dribble is amusing.just think for yourself & avoid made-offs.

Feb 19 02:00 PM

[henarl:]

Entertaining article. Great use of analogies and sarcasm to describe Congress and Wall St. I would have to disagree about a couple of things tho. I don't think of congressmen as the "master thieves" and bankers as the "acolytes". The Masters of the Universe make as much in three or four years as a congressman does in his whole career. I would say that makes bankers the masters and the congressmen just hired employees. Furthermore, I don't think congressmen are smart enough to be jealous of bankers - they're too wrapped up in their own egos. I also think the congressional "outrage" was just a show to impress their constituents that they were "on the job". After it was over, they probably all went out and had a drink together and laughed at how stupid the American public was to believe any of them. I do agree with the comments about the media talking heads - another grossly overpaid segment of our population.

Feb 19 02:37 PM