My favorite financial Doomer Paul Farrell is mad as hell about our Ripoff Economy, but he knows too much to pretend we can do anything about it. His latest diatribe is American Investors: Predictably stupid losers—
ARROYO GRANDE, Calif. (MarketWatch) -- Yes, I am mad as hell again. Wall Street's soulless, immoral, greedy bankers really believe that the vast majority of America's 95 million investors are not only "predictably irrational" but "stupid," as J.P. Morgan Chase's chief investment officer put it in Forbes a while back.
Worse, Main Street investors are losers for continuing to trust Wall Street after they lost 20% of our retirement money the last decade. Now, worst of all, Wall Street's traders have profiled Main Street investors in their algorithms: Yes, investors are "predictably stupid losers," what Vegas croupiers call a mark, a dumb gambler that can be easily conned out of his money.
Why so blunt? Listen: Recently I explained why the Wall Street banks must kill financial reform, to preserve their multibillion dollar bonus pool. One reader commented: "I worked at the Bear Sterns ... every word written here is true. Fact is, bankers regard themselves as wolves and the public as prey, and speak about it openly, among themselves." Then he added a sucker punch: "What is extraordinary to me is how willingly the sheep submit to this."
There's nothing new in this, as Farrell admits. Let's remember Ecclesiastes I:9-14—
What has been will be again,
What has been done will be done again;
There is nothing new under the sun.
Is there anything of which one can say,
"Look! This is something new?"
It was here already, long ago;
It was here before our time.
And let's not forget banker David Hannum, who said something incorrectly attributed to P.T. Barnum—
There's a sucker born every minute
Human Nature is a funny thing. The way things go, about 10-20% of the people were designed by Nature to rip you off. The other 80-90% of us were designed to be taken for a ride. I don't know why this is.
Our society has been taken over by rip-off artists with some math skills (aka Wall Street) and corrupt politicians with some people skills. (You should immediately distrust anyone who wants to run for public office.) Many of these people are sociopaths, but not because they are greedy—almost all people are greedy to one extent or another under the right circumstances. These Finance-types or politicians are sociopaths because that they are incapable of caring about the consequences of their actions. Their Big Brains have gone haywire. They've got screw loose. They simply don't care!
Thus some proportion of the population is "sick" and there's nothing you can do about it. However, a Decent Society uses a multitude of checks & balances to rein in conscienceless people, to prevent them from running amuck. But in America, the most dangerous inmates are now running the asylum. These elaborate controls on immoral (unethical) behavior have been lifted. (This is often called deregulation or regulatory capture.) The corrupt politicians have rewritten the laws in such a way as to make it legal to rip people off. There is no longer any fear of punishment. Sociopaths can run wild—
- True sociopaths have no conscience—none.
- They make life a game
- They get their kicks from kicking others, from manipulating, and most of all from WINNING.
So we have arrived at the real reason Paul Farrell is so pissed off: America is no longer a Decent Society.
Farrell goes on to castigate those writing on behavioral economics. It seems like every economist is writing a book on the subject. You know the refrain: people are not rational, especially where money is concerned; they move & act together like wildebeest in the Serengeti, etc. Well, no kidding! It's like everybody Rediscovered The Wheel and wants to write a book about it.
Many of these books amount to self-help for investors. Farrell's point is that the game is fixed, it's rigged, so don't get fooled into thinking these books are going to help you out. And he's right. There's no way for you the Retail Investor to win this game, so your only and best option is not to play. You may think you can sit down at a table of professional poker players and come out a winner. I'm sorry to tell you this, but you're only deluding yourself.
Twenty years ago former bond trader Michael Lewis' "Liar's Poker" described the insanity of our addiction to gambling in a few memorable lines: "Men on the trading floor may not have been to school but they have Ph.D.s in man's ignorance." They know that "in any market, as in any poker game, there is a fool. The astute investor Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market."
And as we now know, in the stock market the vast majority of America's 95 million investors are fools — predictably stupid losers.
I learned long ago that gambling was not for me. I'm not a Wolf, I'm one of the Sheep (but only in this sense). So I steer clear of games of chance, and since our economy is now one big game of chance, that makes life difficult. But that's how life goes in an Indecent Society run by sociopaths.