Happy Bastille Day! July 14th is the anniversary of the event considered to mark the beginning of the French Revolution, when a mob of commoners stormed the notorious Bastille prison. the prison was mostly empty, but it wasn’t the freeing of a paltry number of prisoners that was the important. The important part was the commoners put aside their fear of an oppressive aristocracy and struck at one of its symbols. 1789 is a long time ago, but then again, Christmas marks an event 2012 years ago and many people still send out cards.
Nobody sent me a Bastille Day card. Well, I guess you have to give in order to receive, and I can think of some worthy recipients.
JP Morgan Chase, for example, made the news yesterday. It’s stock actually went up, because despite the loss on risky trades, it made a profit. However it also has to restate earnings because it’s losses are a lot bigger than it admitted at first. It took these risks, mind you, despite how these same risky investment caused the crisis of 2008, caused the big banks to need a big bailout, and it took these risks with federal guarantees. So if the losses caused the bank to be in danger, taxpayers would be on the hook. They were supposed to have stopped doing stuff. So a card to spark remembrance of angry 99 percenters might be quite timely.
Then there’s Barclay’s, which submitted made up interest rates for calculating LIBOR. Someone tell me again why voluntary compliance with regulation is a good idea? LIBOR is so fundamental to the calculation of all interest rates, that in Britain, this is being treated as bigger than the derivatives implosion. They’re right to do so. A comparison I heard is that being told LIBOR is being played with is like being told Greenwich Mean Time is wrong. I’d add it’s like being told not just that it’s wrong, but that whoever got it wrong was making up for the sake of whatever made a profit that day. The card to Barclay’s needs to leave space for more recipients, because LIBOR comes from 16 banks, so there’s no way Barclay’s could have done this single-handed. Barclay’s merely got caught first.
The last card goes to Bain Capital especially, and more generally to the private equity firms who engaged in leveraged buyouts. They were pretty slick, figuring out the loophole in law that let’s them buy a company on borrowed money, and then take the cash for themselves while leaving the debt solely on the purchased company. Bain et al get “management fees” and “dividends”, while employees get … well actually, they don’t get anything. Turns out they lose their jobs and pensions. Maybe one of them can get a job running Mitt Romney’s car elevator. This Bastille Day card is also a thank you note to Romney, because his campaign has allowed this pernicious practice to become better known, so maybe the private equity buyers will someday become legally liable for the their own debts. Poor Romney wouldn’t have been able to make his fortune, but maybe he could resort to what his dad did, and actually make stuff.