Everything to win and nothing to lose

Nassim Nicholas Taleb, author of The Black Swan describes How bank bonuses let us all down in today’s Financial Times. Sheer poetry.

The national paradox on Nationalization. The Obama administration doesn’t want to destroy the private banking sector because that would be “bad” somehow. And to appease Congress, neither do they want to reward the investors in those banks with government bailout money. So, the market sells off the bank stocks punishing everyone who entrusted their IRAs to the mutual funds who favored the financial sector on past performance. Nationalization becomes a fait accompli. When Obama says that he wants to force banks to loan money, while eliminating the reward system, he might as well be talking to Martians. The Federal Reserve is the only bank in America where the employees get paid simply to do their jobs. And if they do them well, the reward is “not” getting grilled by a Congressional committee.

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