Financial Overhaul Bill Passes Senate

 The U.S. Senate passes the financial overhaul bill 59-39.

Some four decades ago, one of my worst chores working summers for my dad (he owned  the company ) was getting sent to the bank with a bunch of paperwork.  Lines, stamps, signatures... endless time wasted.  In my school-boy estimation, bankers were amongst the most boring people imaginable - only the head of our accounting department topped them for yawns.  But then again, he was a veritable caricature:  he wore black satin sleeve protectors and green eye-shades, and his papery-white fingers were always smeared in ink. And he smoked a pipe.

Far better to work down at the factory floor, even though it produced a teenage social disaster;  at the end of the day I couldn't get the smell of grease off my hands no matter how hard I scrubbed.  Try that with a date. And to top it all off, the pay sucked big time because - according to Dad - the owner's son obviously had to work for free.  I even had to work Saturdays. He called it building character, I called it slavery.

But, I digress.

The point I wish to make is that banking was boring, bankers were boring and anyone who wanted to be a banker was bonkers.  And that was a good thing.

By contrast, today's bankers and financiers (still) think of themselves as the swashbucklers of the world, moving billions at the press of a button or with a quip of "mine" over a direct phone line. They rarely, if ever, pause to ponder what it is that they actually provide to the real economy, what it is that they produce or even facilitate.  The most senior of them may mumble some stock phrase from the Chicago School prayer book, but deep down they know damn well that all they accomplish is to increase total systemic risk for the real economy.

Proof? 

• Financial engineering, coupled with lax regulation and unquenchable thirst for ever more yield pickup, made it possible to slice and dice obviously crappy loans into tranches and then into bonds and derivatives that were transmuted into AAA assets.  And those were further leveraged, both by outright margining them  within portfolios and/or by turning them into even more esoteric, higher-order structured products (structural leverage).  No wonder the professionals who slapped these products together referred to them as "shitty deals".  It didn't matter that some ludicrous math priced them at stunningly low 30 basis points (0.30%) over  risk-free Treasuries. When the shitty (deal) hit the fan - as it always does- it was not the bankers who got whacked, but the homeowners, the construction workers, the factory workers, the realtors, the insurance brokers. Most outrageously, the bankers got bailed out and got record bonuses.  God's work, my ass.

I could go on, pointing out the complete absence of real economic benefit  or merit in activities like: high-frequency/bot trading in shares, 200-1 leveraged FX trading for individuals (also known as bucketshops), financial spread betting (also, also known as bucketshops), index tracker/reverse index tracker ETFs, etc. etc.

But it's Friday once again and I have better things to do.  And my hands no longer smell of grease (well, maybe a bit of bicycle grease..).