Profit-Taking

Speaking of ginormous balls, Matt Taibbi's article on the wall-street profits is well worth reading. Although it pains me, I have to defend the traders here a little bit. If the government presents, repeatedly, opportunities for them to make risk-free money, they have to take it. They just can't help but do it. You can't really expect traders to have any social conscience or to ponder the greater good or, really, to spend even a microsecond on the question of whether they have any human social responsibility whatsoever. It's unrealistic to expect them to act as if they were humans with moral and ethical considerations, even ones that are suppressed and ignored. "Ethics" is only considered with respect to a calculus of financial gain or loss. Morality doesn't even come into it. It is as purely amoral (and thus, arguably, as purely immoral) as an industry can be.

These are creatures who are exceedingly good at gaming anything -- figuring out where the chances to game exactly live, in a changing environment, and taking advantage as quickly as possible. That's all they do, and they do it to make money. At an individual level, there is huge upside reward potential and minimal or zero downside risk. At an institutional level, "too big to fail" means relatively small downside potential and huge upside potential. Private profit, public loss. That they usually get to write many of the rules helps, too. So if the government loans them money for free then offers to borrow it back not for free, why be surprised when they do it? If the government decides to sponsor purchases of toxic assets in a way that will raise market value for those, why be surprised when banks start buying them to resell or revalue and make profit?

They can no more resist than our pet carp can resist when we drop a couple food sticks into the water. Investment banks have repeatedly made it clear they are not fully functioning members of society. Why keep treating them as such in the hopes they'll rise to expectations?