Earlier this week, I watched the documentary Page One about the inner workings of the New York Times and the dire financial difficulties daily newspapers face to survive. It’s a great movie. It’s also a very depressing movie. Journalism is one of my passions. Every year, I lecture at the journalism schools of UC Berkeley and Northwestern, and I believe an informed citizenry is vital for our country’s economic and cultural wellbeing. That’s why it’s so disturbing to see newspapers dying all over the country while glib, superficial, and often politically slanted outlets like Gawker and the Huffington Post thrive.
The movie also touches on another depressing trend in American business–the “strip and flip” mentality of too many private equity firms, and the warped way our tax system aids and abets these destructive behaviors.
Recently, I was subjected to the unpleasant experience of watching the press fawn over a bunch of self-satisfied celebrities who contribute little or nothing to society. No, I’m not talking about the interminable Oscars coverage this past week. I’m talking about the reaction to the Federal Reserve meeting minutes from the 2008 financial crisis, which were released two weeks ago.
In the popular press–even at the reliably liberal New York Times–it has become conventional wisdom that the biggest mistake of that era wasn’t bailing out the most corrupt and incompetent firms on Wall Street with billions of dollars in taxpayer money. The biggest mistake was not making the bailouts big enough.
Welcome to my new blog. I’ve been managing money successfully for three decades now and I’ll be posting regularly about investing and finance. I’ll probably spend a good amount of time complaining about my industry, too. What can I say? I’m kind of an odd bird–I’m an investment manager who despises just about everything about the investment business and Wall Street in general. With that in mind, I’ll start things off with a post on what you might call an “oldie but a goodie”—the infamous Wall Street bailouts of 2008, and something almost nobody understands about them.
David Stockman wrote something very true and yet very taboo recently. In a New York Times piece published last week, the former congressman and Reagan budget director argues persuasively that, despite what just about every pundit and politician has been saying for five solid years now, those bailouts did NOT “save us from the next Great Depression”: