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Grim Reaper Tells Government, 'Step Aside'

Grim Reaper Tells Government, 'Step Aside'  
October 24th, 2008
By Max Rottersman

 

HANOVER, NH (ETFguide.com) - It's as hard to find a healthy company suffering from frozen credit lines as it was for 1950s Joe McCarthy to find a real Communist. Wall Street keeps saying business can't exist without the big investment banks, but I don't see it. I was in Boston recently and I didn't see any stores shuttered or anyone selling apples on the corner. Certainly there are problems with debt.  There there are always problems with debt. I learned my share when Seymour Durst's National Debt clock went up on 43rd street in 1989, when I was 28 years old. I think I went out and got another credit card.

 

The story is backwards. The question isn't what will happen to the economy if the investment banks fail. The question is what will happen to the investment banks if the economy sails on.

 

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Bear Stearns, Lehman Brothers and AIG were not real banks or real risk managers. To them, risk wasn't something to be avoided, risk was something you sold. Indeed, the riskier it looked the easier it was to sell, and sell they did. Why should it surprise us that companies that lived by risk died by risk?

 

Now the spirits of the free-market underworld have arrived. The grim reaper of risk has pointed his sickle at the risk-sinners and our government has stepped in front of them and said, 'not yet.'  And the more the government has stood between destiny and these organizations the madder the reaper becomes. The government is writing a self-fulfilling prophesy. The economy will be taken down.  

 

Not a moment too soon, the Grim Reaper says the following:

 

You people selling mortgages to people who can't repay them; “Goodbye.” You people selling equity-loans; “So long.” You people securitizing bets on bonds; “Sit before Congress.” You people running the people running all of those people; “Take your money and hide.” You people giving credit cards to anyone with a pulse; “We're downsizing.”  You private equity types who think restructuring a balance sheet will make K-mart thrive. “Think again.” You hedge funds. Ever heard the saying, "Man plans, God laughs?” “Go get a real job.”

 

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Ironic isn't it, that the very industry that has caused real pain to real people and families losing their homes has so far had the government's undivided attention. I haven't read one piece of credible proof that the obliteration of these Wall Street firms will cause a depression. Maybe it's true. But no one has convinced me. And I don't care how much money CEOs make. Never have. Most American don't care enough to write their Congressman about it either. Again, I just want to know where there's proof that banking runs the economy, rather than the other way around.

 

Look at the destruction these investment bankers have brought upon themselves. Yes, Ma, they got what they deserved.

 

No economy can succeed without efficient energy. Even with the price of oil going down, the problem remains close at hand.

 

ETFs tracking alternative fuel and the clean energy movement are PowerShares WilderHill Clean Energy (AMEX: PBW), Market Vectors Global Alternative Energy (NYSEArca: GEX), PowerShares Cleantech Portfolio (AMEX: PZD), and PowerShares Global Clean Energy Portfolio (AMEX: PBD).  

 

Max Rottersman is a partner of Hanover Technology Group, LLC. His opinions don’t necessarily represent the views of ETFguide.com or Yahoo Finance.

 

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