Running to mom

Willem Buiter, who writes lengthy, dense blog posts on finance, has the more entertaining Uwe Reinhardt guest blogging on the similarities between moms and government regulation. The pay-off:

Eventually news penetrated even Wall Street that millions of the dodgy mom-and-pop mortgages would be likely to default unless government came to the rescue. Once that became obvious, the CDOs directly or indirectly based on these mortgages plummeted in value, driving many heavily indebted investors in them to the brink of bankruptcy, among them some of the big banks. And thus we now hear from Wall Street the primeval scream “Mom! Mom!” – with ”Mom” being dutifully played by former Princeton colleague Ben Bernanke of the Fed and, ultimately, the U.S. taxpayer.

Alas, it is a safe bet that a year or so after the federal “Mom” will have brought succor to these swash-buckling free-enterprisers, they once again will sit in their offices, clubs and golf carts, cursing the government and its “mindless regulation.” And therein lies the essential difference between teenagers and the adults on Wall Street. Eventually teenagers learn to appreciate their Moms.

Martin Wolf provides his explanation for the difference in the comments:

The reason teenagers learn to appreciate their Moms is that, in the end, they grow up and become Moms (or at least Dads). But the swash-buckling free-enterprisers one meets in financial markets never grow up. If they did, they would have to do more than just take a 95 per cent pay cut. They would have to admit that much of what they used to do was not just useless, but dangerous. That is asking too much. So what do they do, instead? They insist that the disaster they caused was an unforeseeable accident, as in “Mom, mom, where did that fishtank come from? It got in the way of my bar bells.”

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