Reading the paper today was such a joy. I had to share it with the broader world. Recently, JPMorganChase (note the German smashing of words together whenever one thing swallows another), one of the world's greatest and most powerful and clairvoyant and mystifying financial institutions made a little boo-boo. The lost--because of as best I can tell they pushed too many chips on black instead of red during a roulette game--about $2 billion (today revised up to $3,000,000,000 dollars). They will still be posting a quarterly profit, however, which should make the average person wonder how many times you can lose a few billion and still post a profit.
All this is well if not good, but none of it was why I could not stop reading about the story. One one has caught on to what is happening, so for now it will be between you and I. Here is the deal and I am not making this up. The mess was caused by a guy named Achilles who flew into a rage and who could not be convinced by other people that his decisions were going to put the whole venture at great risk. This son of Pelius was running a department of the London branch and taking great risks. Some of the American would try to talk him off the ledge, but repeatedly he flew into a rage during conference calls with New York. The big boss, Jamie Dimon (or Agamemnon in this tragedy), was off attending to other matters. His boss, the Nestor of the story, Ina Drew, was felled by a deer tick and was out of the office with Lyme's Disease. This led to Achilles becoming unruly and the whole thing crumbling. I am only wondering if someone at JPMorganChase has contemplated building a large wooden horse and sitting it outside of Goldman Sachs.
Of course, the government and the President will look at this as proof positive that everyone needs more rules. This misses the point. Every time something bad happens our government tries to stop it from ever happening again by restricting freedom and imposing rules (aka Orc talk). We should be free, but what should we be free to be? The problem at big banks like JPMorganChase and Goldman Sachs is not that they need more rules it is that they have totally lost a sense of proportion. They are making such complex wagers and bets with number that defy human comprehension with the double perverse incentive of knowing that they are playing with home money (i.e., that they will not personally lose their shirts or their houses in the Hamptons even if blow it because their companies money comes from stock payers--not their own money) and that they can't go broke anyway because the government will run in with the people's money (or we should more rightly say the lives of future generations) and heave some group of unborn Iphigenias onto the altar to change the way the wind is blowing. With these "incentives" the behavior seems rational. It, however, should not be allow or it must be allowed to run its normal course. If it were not allowed, the life of the future would be protected (the charge would be blasphemy or attempted omniscience or someone need some comeuppance). If it were allowed to run its course, at least folly would be uprooted. As it is, we simply want to regulate it (and strangle the other legitimate investment) or give it free run with a promise to play nice. Both of these outcomes are suicidal to democracy. Presently, these seem to be the only options on the political table.
Still, someone should stop and think right because who could make this up. A bank run by a guy named Dimon lost a fortune (or many fortunes) in a three month period because an insect the size of a pin head and because of the rage of Achilles. Sing goddess. Come on please sing. The blind poets are waiting.
