The Corner

Voice of the Reductionist

Splendid piece by Andy Mac there today.

Obama’s spinning this as Wall Street versus Main Street, with Goldman Sachs wielding the cudgel and widows and orphans at the receiving end.

That’s nonsense. As Andy says, the counterparties on both sides of these transactions were Wall Street professionals. They were just betting different ends of a spread. Which is what they do, all day long. Bond brokerage counterparty files were my bread and butter for several years. I don’t recall seeing too many widows and orphans in the NAME field.

It is true, of course, that there might be a widow or an orphan at the bottom of the financial food chain there somewhere. If so, however, it’s because they wanted to make a buck – a better buck than they could make from a bank savings account or plain-vanilla CD. Well, Caveat emptor.

The dirty little secret of Wall Street is that investing isn’t a whole lot different from speculating. In the end, it’s all a casino. If you can’t handle that, get a savings account.

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