Paul Krugman is not wrong again

Does Paul Krugman ever get tired of being not wrong? You would think, at least by now, he would be hanging his head in shame for being not wrong. You would think that he would be writing tame columns about how bad the bedbug problem is in Manhattan for the metro section. Is he still on the Op-Ed page? Why? He is not wrong, but he is still there.  In what purports to be his latest column, he says something ridiculous that only I can debunk:

First, there’s no longer any reason to believe that the wizards of Wall Street actually contribute anything positive to society, let alone enough to justify those humongous paychecks.

Remember that the gilded Wall Street of 2007 was a fairly new phenomenon. From the 1930s until around 1980 banking was a staid, rather boring business that paid no better, on average, than other industries, yet kept the economy’s wheels turning.

So why did some bankers suddenly begin making vast fortunes? It was, we were told, a reward for their creativity — for financial innovation. At this point, however, it’s hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes.

Consider a recent speech by Ben Bernanke, the Federal Reserve chairman, in which he tried to defend financial innovation. His examples of “good” financial innovations were (1) credit cards — not exactly a new idea; (2) overdraft protection; and (3) subprime mortgages. (I am not making this up.) These were the things for which bankers got paid the big bucks?

Still, you might argue that we have a free-market economy, and it’s up to the private sector to decide how much its employees are worth. But this brings me to my second point: Wall Street is no longer, in any real sense, part of the private sector. It’s a ward of the state, every bit as dependent on government aid as recipients of Temporary Assistance for Needy Families, a k a “welfare.”

Now, what Mr. Krugman fails to do is explain the difference between a "banker" and an "investment banker." A banker is a fat man with glasses who knows the combination to the big walk-in safe where all of your money is stored. He wears a top hat and yells at bank tellers all day. Once in a blue moon, he might slap a bank teller on the fanny and tell her to get him some coffee. Good times. An investment banker creates wealth and opportunity by explaining what works and what does not work to a client. Krugman is right if he's just talking about the aforementioned fellow who slaps the tellers on the rear and leers at them in the vault.

He's not  wrong if he's talking about investment bankers, such as myself. The services I used to provide were crucial. I would advise people on deals and on the timing of deals. Timing is a crucial factor. Yesterday, a company might be worth millions. Today, it's a bargain at $350K. Tomorrow, it's a dog worth fifty cents. It was my job to know when to buy that company and what to take apart once it was purchased and who might want to buy off those parts. That's what innovation means. That's what Bernacke probably meant. I don't know.

Never met the man. I do know this--Krugman should not run his columns by an actual investment banker once in a while. It would save him the embarrassment of being humiliated for being not wrong.

Iceland decides to muddle through

Many years ago, before I admitted being of Irish descent, I fancied myself somewhat Scandanavian. My Mother was Scandanavian, hence my long blonde hair. It seemed little, if any, Irishness had gotten into me. Father was displeased. Instead of being short, dark and wiry like him, I was tall, hippy, blonde and rangy.

When I say "hippy," I mean, I have always had swinging wide hips. I was never loose with my love or anything like that. That's a hippie. They're evil. I suppose that I could have been Icelandic at one point. Who knows? When you read about these people, you have to admire them:

On the street, people talk of standards of living that have been set back to the 1980s. Fears of an exodus of professionals to Europe and North America run deep, though the government says it has seen no sign of it.

Nobody has been able to put an overall price tag on the meltdown, though some estimates run to $10 billion, $30,000 for every man, woman and child in the country. The bank collapse alone is expected to cost taxpayers nearly $3 billion, on top of another $3 billion the government has invested in the new nationalized banks built on the wreckage of the old. More than $1 billion has been pledged to pay out foreigners who deposited money in the collapsed banks, mainly in Britain, whose action in using counterterrorism laws to freeze the Icelandic banks’ assets in October is widely regarded here as having started the collapse.

Against this grim backdrop, the election unfolded in a climate of Nordic tranquillity. Although police reinforcements were deployed to protect against any effort to disrupt voting, election officials said they were more concerned with the logistics of counting votes, a process involving a squadron of light aircraft and small boats that ply between the Icelandic mainland and outlying islands, than with any deep concern about political disruption.

Both government officials and outside observers seem to agree that now, on the eve of the election, the country’s mood is turning away from the tone of insurrection that drove the January protests and toward the traditions of practicality and hardiness that have sustained this rocky country for centuries.

“We have grown used over our history to bad harvests, seasons with no fish, the bad climate, things going up and down,” said Olafur Hardarson, dean of social sciences at the University of Iceland.

“People are saying, ‘This will be bloody tough, but we’ve got to get on with it, and we’ll muddle through.’ ”

They sound like badass people.

And what that means is, they'll suck on failure for a while, get tired of it, and figure out how to write off their disaster. Someone will have to pay for it. Someone in a smaller country who's dumb and willing to sign papers, I would imagine.

The world has plenty of countries, sometimes the number is over 150 or so. There are ten you can't mess with, and the rest are clowns. You can steal their money and laugh because you're an American, you see. It's your birthright. Iceland? Your birthright is misery, fish, and volcanic rocks. Cowboy up and keep writing bad checks.