Like many software developers in New York City, I've done my time in the financial district. I was working on the 17th floor of the JP Morgan bank on 60 Wall (the building is now occupied by Deutsche Bank) when I started LitKicks, and I often used to write about life on Wall Street in those days. Since then I've left downtown Manhattan to develop websites for magazine publishers, record companies, television networks and litigation consultants, yet somehow these days I find myself back again in the skyscraper jungle on Manhattan's lower tip. I'm writing this from an office a couple of blocks north of Wall Street, where (in case you hadn't heard) they've been having a hell of a rough time.
From my vantage point as a Java coder in a cubicle, I can't tell what's wrong with Lehman Brothers and Merrill Lynch and the entire industry. I listened to televised sound bites last night from John McCain (who says America's economic structure is fundamentally sound, but charges that an "alphabet soup" of regulating bodies has the credit industry confused) and Barack Obama (who says we need better and more effective regulation). It's not because I work here, but rather because I have common sense, that I know Obama's answer is better than McCain's. We are dealing with the classic tradeoff between laissez-faire deregulation (McCain) and governmental oversight (Obama). Investment banks are collapsing due to bad loans, and I'd rather strengthen the regulating bodies than criticize them.
Why do banks make bad loans? Because loans are a source of profit -- both long-term profit (interest) and immediate profit (fees). As long as banks are issuing loans for long-term profit, they are likely to make good decisions. The problem arises when the short-term reward -- the money that changes hands whenever a deal is made -- becomes more of a motivation than the long-term reward. In recent decades, the USA's banking industry has moved significantly beyond sensible, earthbound business practices towards an unprecedented emphasis on perpetual growth and unnatural profit. The problems this trend has created transcend politics, and will not be easily solved. But at least Barack Obama's statements identify and address the problem. McCain's notion that our economic habits are fundamentally sound and that the problems can be solved by "cleaning up" governmental regulation rather than increasing the level of regulation amounts to complete denial that there is a serious problem that needs to be fixed.
2. Richard Wright, who played sublime keyboard solos and sang harmony vocals for Pink Floyd with a placid smile on his face, has died. Wright's proudest moment may have been the composition of "The Great Gig in the Sky", Pink Floyd's most heavenly song.
3. Frank Mundus, a Long Island fisherman who inspired the character Quint in Peter Benchley's novel Jaws, has also died.