2. Who is to blame?

Another favorite topic. Given that we are only 2 weeks away from one of the hardest choices the US population has to make (thats what I also thought in 2004), clearly there has to be someone to blame.

Just so we are clear, I need someone to blame for the fact that banks are constantly writing off $50B, 3 large banks have vanished, and the various Central Banks have had to back-stop these idiots with my money. So... who is to blame for my money being wasted like this?

I watched super-villan Fuld getting his bones chewed at some irrelevant House Committee.

The moron questioning Fuld, I don't event want to hunt down his name, is not worth the piece of paper he is reading from.

Anyway, who is really to blame? The bankers? They ran un-regulated and no one complained when it was raining money... the government? As we all know they are incompetent. They wouldn't see a financial crisis if it came and knocked at the door. Plus clearly they were not going to shut down a source of re-election money.

I gave my money to the MF houses to invest since you know diversification and all that crap. They bought stock in Lehman amongst other things. Lehman was wondering what to do with all this money, so they gave some of it out as bonuses and with the rest of it, they leveraged it, and bought some cashflow on a bad loan pool from assets whose price was about to fall. In order to leverage, they issued bonds to the same mutual fund houses. The mutual fund houses then also bought insurance against default from AIG. AIG was supposed to take this money and put it away, just in case. But you know the same mutual fund also had equity in AIG. So AIG took the money, handed out bonuses to their people, and with the rest...

You know how it goes and how it went.

But at the bottom of it were the investors who invested in Lehman without knowing what Lehman was doing with the money.

Now the same investors, having lost their money, are being asked to pay out more money to save whatever money they might have left.

What other choice is there?

If it is still not clear, I feel it is those investors who are to blame. I think there was a slight amount of laziness from individual investors who trusted institutions, not with their funds, but with their judgement. They let professional money managers make decisions for them. Good when the going was good.

Capitalism is driven by individuals being responsible and curious for information. It is quite similar to democracy in that sense. It only works if each of us makes our own decisions and exercises our judgement. If we are lazy and give that power to a few, we have no one to blame but ourselves.

But neither BO or JMac will, can, or afford to blame Joe the Plumber or Joe Six Pack.