But Mom, It's Not Faaaaiiir

This is another in my occasionally-appearing series of posts you should not read. It's just going to make you like me less, frustrate you, or make no sense. You have my apologies. I recommend you spend a few minutes here or here instead.

To recap, a brief update on where we stand in the whole Wall Street imploding, financial world ending, class warfare beginning thing:
- National governments have supplied capital (generally not equity, but we'll get to that below) to prop up virtually every major bank in the world.
- People have noticed that the funds for these programs are drawn from the nation's general budget rather than some magical bucket of reserves saved for just such a purpose by our wiser predecessors.
- People are outraged that their money is being "given" to the fat cats who spend it on private jets, office remodels, and big bonuses.
- Populist politicians (currently most of them) are suggesting compensation caps and other draconian measures to ensure that this doesn't happen again.

This is all pretty fun for those of us in the business, so I hate to rain on the parade. However, I must confess my desire to shout at the stupids while violently shaking them in hopes of getting across a few points:
- Money used to support the banking system is no more "your money" than the Medicaid dollars spent to pay for your child's emergency room visit necessitated by your unwillingness or inability to pay for private insurance is my money. Look up fungibility.
- The government doesn't own equity in most banks, at least not yet. I know that most of you have no understanding of how corporations work and probably don't care because you're pursuing your own agenda, but it's the equity owners who dictate how companies are run. Should other parties have a voice? That'd be nice (not really), but the system doesn't work that way.
- You are not the "largest shareholder in Bank X" as I keep reading in press articles. See the above point -- you're not a shareholder at all. Even if the government was a significant common equity holder, your individual portion of that stake would be represented by the value of your portion of national tax revenue divided by the government's investment. For most of the loudest blowhards, the numerator is so small in that equation that the resulting value is irrelevant.
- We get it: you're mad because bad decisions by people doing things you didn't understand have damaged the global economy and hurt your family. Welcome to the party. Half a dozen of my friends have lost their jobs in the last few weeks. Not one of them bore any more direct responsibility for the decisions that got us here than a schoolteacher in Oklahoma.
- Stop whining about how unfair it is that some people made so much money. You hear all about the hedge fund manager who earned a billion dollars in one year or the retiring CEO who is getting $150m to sit on the beach. Are you so naive that you believe those numbers are typical? When was the last time you read about the banker who works a hundred hours a week, is paying fifteen thousand dollars a year in property taxes for his modest three bedroom home, owes a hundred thousand dollars for student loans and was just told he worked last year for free? There are far more of those stories across Wall Street -- even in normal times -- than the ones pitchfork and torch bearing mobs cite.
- Your views on how to "punish" those responsible for this mess are the best example of cutting off your nose to spite your face that I've seen in years. Want to know why things went from bad to worse last summer? (I know you don't really care, but I'm going to tell you anyway.) Lehman Brothers. No, not the bad investments or inability to access capital that pushed the firm to insolvency. It was disorder created by the loss of a major counterparty and the difficulty of unwinding tens of thousands of complicated financial contacts. If the same thing were to happen today with a much weaker financial system the outcome would be worse. Be careful what you wish for -- you just might get it.

Edit: Let me be clear in my use of pronouns. All "yous" after the first paragraph are directed at people getting up in arms without having even the slightest understanding of what is happening. My vitrol matches their foolishness, but few people who come across this post will fit into the addressed audience. Just venting here instead of throttling someone at church or on the street.