If there’s one thing the Street hates, it’s uncertainty. Like most of my neurotic friends, its mood swings inappropriately high on the slightest whiff of good news, and zooms to depressing depths at the merest suspicion of impending bad karma. Given the paucity of the former and the plethora of the latter, it’s been a crazy ride lately, with trips to the moon closely followed by extended visits to the sewage system that runs beneath corporate capitalism on an all-to regular basis.
Like Mr. Paulson and Mr. Bernanke, I would like to do whatever I can to help restore confidence and solidity to the marketplace. In support of that effort, I hereby offer a few thoughts on what, even at this challenging juncture, is not in any sort of doubt:
- An individual in danger of losing his or her mortgage will be worse off, in the end, than the majority of executives working in the institution holding that mortgage;
- While investment banks may change their stripes, investment bankers will not;
- The bailout will most dramatically benefit those who created the crisis in the first place;
- The new levels of oversight and regulation that are implemented will have the greatest impact on those firms which require it least;
- All the excesses and depredations foisted upon our poor economy will be back very soon, because it’s simply too boring to do business or make obscene amounts of money by playing things straight;
- An extremely small number of highly fungible executives will be punished for their actions; they will later emerge from prison to become philanthropists;
- An entire graduating class of pundits, senior managers, hedge fund speculators and debunked risk-management geniuses will be jettisoned from the body of the system; they will appear almost immediately in the financial media playing the part of experts who can explain whys, wherefores and potential future courses of action;
- Wall Street will survive;
- Main Street will suffer;
- The rich will probably have to wait a while to get richer;
- The poor need suffer under no such limitation to achieve their customary status.
When the Soviet Union fell, all the Eastern European countries had to reconstitute their governments. Former communist bureaucrats had to scramble, since the whole philosophical and operating infrastructure under which they had professionally and personally prospered had been yanked away. Today there are entirely new institutions governing those nations, and in many cases the same bureaucrats who prospered under the old regime are still running the game from new offices, with new titles, new letterhead, new committees to chair. I have no doubt as we transition our economy to a new more equity-based model, the former scions of the now-discredited system will once again rise to the apex of power under a brand new flag.
It’s not only cream that rises to the top.
