Friday, April 23, 2010

FLG Didn't Think Matt Ygelsias Could Piss Him Off

...even more than he did in the previous post, but FLG was wrong.

Matt offers up this doozy:
One piece of commentary I’ve heard around the Goldman fraud suit is that somehow Goldman can’t be guilty because the folks they allegedly ripped off were “sophisticated investors.” I’m not a lawyer, but like Tim Fernholz I can’t make heads or tails of what kind of legal doctrine this is supposed to be. Suppose I get shot and killed in New Orleans—is the shooter allowed to argue in court that as a sophisticated consumer of FBI crime data I should have known better than to walk around the city that had 63.6 killings per 100,000 residents in 2008?

Or consider another angle. One thing I’ve heard from low-income unbanked people is that they don’t want a bank account because they don’t trust the bank with their money. By contrast I, as a sophisticated investor, understand that there’s deposit insurance and a variety of other legal protections that ensure I’ll get my money back. A bank can’t break the law, steal my money, and then say because I was “sophisticated” it’s okay to lie to me. Sophisticated people are familiar with the law and rely on it when making decisions.

Let's deal with ludicrous shooting analogy.  Typically, being shot is not a choice on the part of the victim.  Whereas, the parties in this case willingly purchased securities.  The second point is again silly because Yglesias isn't a sophisticated investor because, quite simply, he knows shit all about finance.  It's only his intellectual hubris that allows him to even say some shit like that.  Perhaps in comparison to an unbanked person he's sophisticated, but he's not in any absolute sense.

A better analogy are the disclaimers about not trying these stunts at home or going to a professional fireworks show instead of lighting them off in your backyard.  It's a question of expertise.

Put simply -- the people who Goldman supposedly took advantage of get paid on the basis of their expertise at picking investments.  If they get suckered, then they're incompetent buffoons.  It's their fucking jobs not to get screwed.  The laws for financial regulation largely revolve around two things -- people not screwing grandma out of money and keeping big firms, who are sophisticated, from taking on too much risk.

My point here is that a lot of this push for reform, as I've said before, is predicated on people being stupid.  They're too stupid to know the difference between fixed and flexible rate mortgages.  Too stupid to read their credit card statements.  Too stupid to pay them on time.  In general, just too stupid.  This makes sense when we are talking about the general public -- people whose jobs aren't finance.  Well, when you are a banker who is paid very well to pick investments, you have to think they're stupid as well for them to get scammed and then you are calling them incompetent.  And then the issue is really there professional incompetence rather than legal issues.

And finally, the idiot and sadly a Georgetown alum I believe, Tim Fernholz, that Yglesias linked to in his post, sums up with this:
If even the most advanced firms are being taken for a ride, we should wonder what Goldman must be doing to regular folks.
Oh really?  Goldman doesn't have regular folk customers to take advantage of, fuckwad.  If they're screwing regular folks, then it's through intermediaries.  Intermediaries who are not only paid but have a fiduciary responsibility to their customers not to let them get screwed.  Since it's clear you don't know jack shit about how finance works, maybe you ought to keep your ill-informed musings on the subject to yourself.

Fuck, I'm pissed off today.


The Ancient said...

In an otherwise piss-ant column, David Brooks says this:

One of the odd features of the Democratic Party is its inability to learn what politics is about. It’s not about winning arguments. It’s about deciding which arguments you are going to have.

i think the very same thing could be said about the Republicans.

(The difference being, the Democrats control the government, and the Republicans think that being The Party of No is a Stairway to Heaven.)

The Ancient said...


No, it's really so much worse than that.

In the House, for more than a decade, the Republicans have taken the position that if a problem couldn't be dealt with through deregulation or some sort of tax abatement, it wasn't really a problem.

Hackery has become dogma -- and you see the sorry fruit of this at the Corner all the time.

(Foreign policy is a different matter. But elections seldom turn on such things.)

FLG said...

The Ancient:

"Hackery has become dogma -- and you see the sorry fruit of this at the Corner all the time."

There's truth to that certainly. But I drew issue with Matt's claim that crankery and know-nothingness were the essence of conservative politics period. If he'd said recent conservative politics or with some other qualification, then I might have not been so pissed off by it.

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