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Monday, July 26, 2010

Dispatch from Topsy-Turvy Universe
Posted by Jill | 10:34 PM
In Topsy-Turvy universe, CEOs are the poor, beleaguered ones and it's the people living on $1500 a month in Social Security benefits after paying into the system their whole lives who are the greedy ones:
Remember Neel Kashkari? Back during the financial crisis, Kashkari sat at the U.S. Treasury's Office of Financial Stability, where he was in charge of implementing the Troubled Asset Relief Program -- the fancy name for a wheelbarrow full of $700 billion in taxpayer money that went to revive the do-not-resuscitate banks of the world, which is exactly what those banks asked the government to do. Well, the whole experience made Kashkari terribly, terribly sad! So he went out into the woods to build himself a Cabin Of Emotions, where he could grieve over the fact that Washington, DC had lost the lustrous glamour that attracted him in the first place -- during the Iran-Contra hearings.

But since then, he was rescued from his doldrums by bond giant PIMCO, where he became its managing director of investment management. Now he's on the op-ed pages of the Washington Post, with a message for the olds: STOP BEING SO "ME-FIRST" and let us cut your entitlements!
A nation's culture can have a profound impact on its competitiveness. Our shared beliefs in free markets, fair play and the rule of law inspire entrepreneurs to pursue their dreams and give global investors confidence to bring their money to America. These beliefs have passed from citizen to citizen, from generation to generation. They have strengthened over our history and brought an important competitive edge to the United States.

Hey, let's remember some basic things before we go any further, shall we? "Free markets" equals "too big to fail banks will never be allowed to fail." "Fair play" equals "bailing out these too big to fail banks when they nearly destroy the economy while small banks die by the hundreds." "Rule of law" equals "big banks using derivatives to get around capital rules." Okay? Moving on!
Our belief in free markets is founded on the idea that each individual acting in his or her self-interest will lead to a superior outcome for the whole. The financial crisis has reminded us that free markets are not perfect -- but they do allocate capital better than any other system we know. A "me first" mentality usually makes markets more efficient.

Okay! So, a person who retires today probably entered the workforce in the mid to late 1960s. They acted in their self-interest, let's say, and this led to some "superior outcomes for the whole." It was so "me-first" of those people to not consider the possibility that decades after they started contributing to the nation's wealth, that another generation of idiots would come around and destroy it, leaving us with no other choice than to push those aging former societal contributors out onto ice floes to die! What jerks! Where was their foresight? Why weren't they smart enough to get way into toxic mortgage-backed securities? They could be the ones holding America hostage today!
Cutting entitlement spending requires us to think beyond what is in our own immediate self-interest. But it also runs against our sense of fairness: We have, after all, paid for entitlements for earlier generations. Is it now fair to cut my benefits? No, it isn't. But if we don't focus on our collective good, all of us will suffer.

Well, Neel Kashkari isn't going to suffer, because he works for PIMCO, remember? And PIMCO's brilliance was the way it strictly adhered to a "me-first" philosophy:

From the December 31, 2008, Talking Points Memo:
As of June 30th, 61 percent of PIMCO's holdings -- $500 billion -- were in the very mortgage backed securities that it's now being hired by the Fed to buy back on behalf of US taxpayers, according to a September Bloomberg report that cited data on PIMCO's own website.

What's depressing is not that a guy like Neel Kashkari is a greedy bastard. We expect it of people like him. What's depressing is the number of people collecting Social Security who are going to vote for people this fall whose party has been gunning for Social Security since the 1930's.

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