Lanny had to resign

After the Frontline "Untouchable" program last week I don't think Lanny Breuer had any other choice.

The Untouchables

PBS Frontline has done a good job of reporting on the financial crisis. Their latest, The Untouchables, gives a very clear view of how regulation does not replace fear of failure in the marketplace.  The Justice Department showed a prosecutorial cowardice and diffidence to make a case necessary to enforce rules and regulations against those who can afford even stronger defense teams.  When there is no money in the bank it's tough to hire a such a team.  Citigroup management got plenty of internal warnings that something that could jeopardize the bank's very existence was in effect.  Without a bail out Citi would have gone under and justice done.  In this case persuasive influence gave the taxpayer the bullet and management title to their ill gotten bonuses.
Thankfully the private sector has civil recourse where the legal teams opposing the banks are more capable than the quintessential government bureaucrat,  Lanny Breuer.    

After the Music Stopped

I am looking forward to Alan Blinder's new book which I believe will have parts of right on agreement and vehement disagreement for me.

High Speed Trading

Again back to Warren Buffet who considers his share holders as partners in a business.  He does not split the shares of his company because he values long term investors who do not trade in or out of their shares in Berkshire Hathaway.  If it was just individual stocks being traded then I doubt the need, but in a world of artificial instruments (ETFS) and mutual funds the high speed trades arbitrage the differences away quickly and the expense of it all is a testament to the friction costs by which Wall Street lives by. In Warren's world a round lot investment of ten shares is worth 1.3 million dollars. A brokerage firm may make a thousand dollars on that transaction which is in the order of one tenth of one percent commission.  Not much to fund the hardware and quants necessary for a high speed stock trading operation.

Friction Costs

I have been a long time follower of Warren Buffet and Berkshire Hathaway and a quick read of Tap Dancing to Work shows me how I developed the concept of investment banker's playing with themselves and frittering away investor capital.