Waiting for Wall Street's Confession of Immorality


Wall Street could learn a few things from the Tiger Woods apology on February 19. Wood’s detailed apology is an important step toward a gradual rehabilitation of his image. Nevertheless, the healing will not be easy. Nor should it be. People who commit grand larceny — maritally or financially — should expect penalties. Woods faces the prison of public opinion as well as the loss of endorsement revenue. He stole a lot from his wife, kids and supporters. He is deserving of his reward. Nevertheless, when one compares the magnitude of Woods’ malfeasance to Wall Street’s chronic malpractice, Wall Street’s rehabilitation should take much longer. Maybe a millennium.

There is something to be learned about Wall Street from the Wood’s debacle. Too many people are becoming fans again. Some seek gains in an easy money stock price run-up triggered by the Fed’s decision to convert corporate banking risks into sovereign risk. As people return their investment dollars to Wall Street they boost stock prices and make it possible for Wall Street elites to recover the paper losses that triggered the bailout. What’s to like about that?

Once Producer Price Index inflation creeps back into the picture enough to chase away the carry trade, hedge fund elites will cash in their longs and go short against equities from an elevated platform. The new disequilibrium will drive a dagger through the rally’s heart. Fear will set in and consumer confidence will decline precipitously. Once business profits sag and tax revenues contract, investors in Treasuries will realize AAA can mean ‘Awful Angst & Anger.’

In the eventual post-rally environment the Fed will endeavor to levitate markets again, but this time without success. Once sovereign debt in the U.S. becomes larger than GDP — with no end of debt growth in sight — few players will continue to believe in the wizard’s magic dust. A black swan event will appear as the catalyst for a full-blown economic sovereignty crisis. The U.S.A. will become the unsinkable Titanic with a gaping hole ripped in its hull. Members of Congress will bow the knee again — this time to demands much larger than the ones made by Treasury Secretary Paulson in 2008.

The more power that people return to Wall Street, the more serious the calamity against the public good when the sovereignty crisis arrives. Granted, not everyone is returning to Wall Street. The morally astute know that Wall Street must be replaced by a different financial system with a new mission, honorable culture and different set of participants. Worthy capitalism, yes! Wall Street capitalism, no!

Tiger Woods should be credited for stepping forward with a full bodied apology. Granted, he should not be credited excessively, a point masterfully illustrated in a 1994 Robert Redford movie about an Ivy League educated professor who became a cheater (“Quiz Show”). The odds are that Woods’ apology was motivated by money issues as well as a genuine remorsefulness.

Many Americans will wish Tiger well while refusing to celebrate him for a good long time. Meanwhile, Wall Street has offered little in the way of apologies apart from a few grudging remarks squeezed between polemical defenses and a remarkable CEO statement about Wall Street as an expression of ‘the Lord’s work.’ What kind of repentance is this, especially as Wall Street gears up its bailout empowered plunder machine to do more of the same?

Here are some excerpts from the February 19, 2010 Woods apology, with insertions (in [brackets]) as relevant to Wall Street. (For example, the word “I” in the Tiger Woods statement is replaced with the word “we” in reference to Wall Street.) Reflect on the message. If you’re tired of being Wall Street’s public, take your money from your Wall Street broker and invest it regionally to help build a productive and sustainable America. Get a piece of real ownership in a local partnership or private corporation instead of a stock certificate that is buoyed, then buffeted, then busted by the winds and waves of Wall Street machinations.

Good morning, and thank you for joining [us]. ...[E]very one of you has good reason to be critical of [Wall Street]. People want to know how [Wall Street elites] could be so selfish and so foolish. [We] have made you question who [we are] and how [we] have done the things [we] did. [We] have a lot to atone for. [We] cheated. What [we] did was not acceptable.

[We] knew [our] actions were wrong, but [we] convinced [ourselves] that normal rules didn’t apply. [We] never thought about who [we] were hurting; instead [we] thought only about [ourselves]. [We] ran straight through the boundaries that...people should live by. [We] thought [we] could get away with whatever [we] wanted to. ...[We] felt we [were] entitled. ...[We] were wrong. [We] were foolish. The same boundaries that apply to everyone [should] apply to [us]. [We] brought this shame on [ourselves].

It’s now up to [us] to make amends. ...It’s up to [us] to start living a life of integrity. ...Character and decency are what really count.

(See the Woods’ apology transcript here.)

To Tiger Woods: We wish you a good recovery and new meaning in life. Your apology is worthwhile. Now, live up to your apology. To Wall Street (just in case any Manhattan Island elites are listening): Can you learn anything from Tiger Woods?