Greed

The Associated Press used a term today that aptly defines the corporate greed that sustains today’s Wall Street culture: casino capitalism. (http://ap.google.com/article/ALeqM5gOZTtahVNy4kICgeQueTNyWQybJAD93H9HL80) Simply put it is the practice of accepting whatever risks necessary, short of breaking the law, to earn substantial profits. It is an unfettered game of craps.

"The managers of big business took huge risks out of greed," said President Oscar Arias of Costa Rica, whose economy is highly dependent on U.S. trade. "What happens in the United States will affect the entire world and, above all, small countries like ours."

In fairness it’s not just the U.S. who is at fault here. As the AP points out, big business across Europe is guilty of the same carelessness and greed:

“It's harder for European leaders to point the finger directly at the United States since many of their financiers participated in the recklessness. London was home to the division of failed insurer AIG that racked up huge losses on credit-default swaps, and many reputable European banks disregarded risk to load up on higher yielding subprime assets.”

Swaps, derivatives, you name it. All were recklessly created to bring big returns for investors. But there’s one thing about greed people forget: it cannot be sated. The more it gets, the more it wants. It is a ravenous beast.

Capitalism is the best economic system that Man has developed to-date. However, there are fundamental flaws with it. It is a lot like Nature in that when acts it doesn’t discriminate between good and evil, right and wrong. Free-market defenders will argue that the system works because as was the case with Bear Sterns and Lehman Brothers, the market weeds out inefficient, unprofitable companies. And macro-economically speaking, they are correct. But at what cost is this done? “This Survival of the Fittest” mentality leaves financial carnage in its wake, and the victims usually are those who have nothing to do with the questionable business practices.

I remember studying economics when I was younger and reading that a company’s stock value rises after it lays off workers. I understood the math behind it: Fewer salaries means lowers costs which in turn translates into a better bottom line. But my first thought was that there is something wrong with a system that rewards a company for sending its workers to the unemployment line.

I still feel that way today.

Donald Tremblay