Sunday, October 25, 2009

Being a Gift II

George Soros, billionaire investor, agrees that the American taxpayers should be furious with Wall Street. Soros said in an interview with the Financial Times that the bonuses were "gifts" from the government:

"Those earnings are not the achievement of risk-takers. These are gifts, hidden gifts, from the government, so I don't think that those monies should be used to pay bonuses," the paper quoted him as saying in its Saturday edition. "There's a resentment which I think is justified."

Soros acknowledged what many have known for some time: The government should not be insuring the likes of Goldman Sachs which is essentially a hedge fund and should not be guaranteed by the government, i.e., taxpayers. "Talented" bankers who took such risks would be on their own as they should be:

"That would push the risk-takers who are good at taking risks out of Goldman Sachs into hedge funds, where they actually belong, because hedge funds take risks with their own capital, not with deposits and not with government guarantees."

Thank you, Mr. Soros!


zorro said...

the question for me is at the time, was there any other choice.
Andrew Sorkin's book (based on what I saw on interviews) concludes that there was no choice.
He even thinks Paulson and Bernake did a good job avoiding a complete meltdown.
I like Sorkin - he discusses what he uncovered in a calm, thoughtful way. I've seen him on Charlie Rose and heard him on NPR. I think we need more of that.

Judith Ellis said...

Mark Fischer of Bloomberg may agree, but he also makes another significant point regarding Bernanke: "Obviously, Federal Reserve Chairman Ben Bernanke and his cronies have learned from the experience of the Great Depression how to repair what has been broken, but they have failed to understand how to capitalize on it."

Regarding Sorkin, I tend to appreciate his typical thoughtful answers generally. But I was somewhat baffled why Jamie Dimon of Chase and John Mack of Morgan Stanley were guests at his "Too Big Too Fail" book signing as if the companies they lead are not now, after TARP, much bigger to fail. I also didn't like the lame answer Sorkin gave for not separating banking from essentially gambling. Soros, for example, makes this point clearly.

Generally, I like Andrew Ross Sorkin.

zorro said...

When I heard him interviewed, Sorkin had good things to say about Jamie Diamond and John Mack.
What I saw Sorkin say about not being able to separate the banks from gambling was that it wouldn't work well if only the US did it - it would have to be agreed upon by other countries also.
There seems to be an awful lot of complexity in these issues that is not explained well by the 24 hour news channels.
Sorkin did his best interview on NPR and his second best was on Charlie Rose. I found him much less impressive on 'the cables'. He seems to modify his behavior by the venue. I think if we had a problem with the economy as profound as the one we have today back in the early 1980's, one of the TV networks would have put together a good documentary explaining it well. I say that because I found a good documentary about Demming done by NBC in the early 1980's on youtube. It can be found by searching for Demming and NBC.

Judith Ellis said...

Thanks, Zorro. I will check out those Sorkin interviews. I will also look for the Demming/NBC interview on youtube. I'm sorry to say that our news is bascially pretty bad these days. I turned on Meet the Press early in the wee hours of the morning when I was writing yesterday and it was just a major turn off. I did just that. I turned it off.