Of Ikea, Greed, Privilege and Inflation

The former CEO of Merrill Lynch now says he wishes that he's bought furniture at Ikea for his office redecoration rather than the $35,000 toilet and $25,000 table he actually bought as part of the $1,200,000 project.

"Does anyone need a $60,000 car? ... Does anyone really need to be told, over and over, spitting in the wind comes back at you twice as hard?"
- Lou Reed, "Strawman"

Justice, morality and stuff

I don't know if Judge Rakoff is right, but refusing to allow a settlement for $33 million of a claim that payment of $3.6 billion in bonuses was improperly disclosed just feels good, doesn't it?

But maybe this is exactly what Edward Greenspan is complaining about. I'm not sure that the claim that we treat allegedly criminal business people no better than "heroin dealers, mafiosi or child abusers" isn't a bit hyperbolic, though.

What do "the most elementary notions of justice and morality" dictate here? Should the penalty for theft vary with the amount of the theft? The sophistication of the act or the number of advising counsel? The unwillingness of the victimized to protect themselves, e.g. by not buying stock in a bank whose operations they can't collectively control (or maybe comprehend)?

Great moments in financial disclosure

Meanwhile, in the post-meltdown, post-Enron, post-Madoff world of financial regulation, it's apparently sufficient to disclose a transaction without disclosing what you sold, to whom, at what price, or whether you made a profit or loss on the sale.

See the details and great commentary here.

The outrage outrage

We all love a good scandal, especially a spending scandal that reconfirms our inherent belief that we're getting horrifically ripped off by someone else's free ride. However, I wonder if this whole process hasn't gotten out of hand, and I know that it's warped our sense of priority.
The current Ontario Lottery & Gaming Corporation scandal is a great example. The spending orgy! Five "hefty black binders" to outline all their incredible profligacy! Why, it's pigs at the trough, again!
I don't know about you, but I was really hoping for some Caligula-like excess that would be fun to read about. If what the Globe & Mail published today were the most outrageous examples of what they could glean from those binders, it runs the gamut from ordinary to inoffensive to ill-advised. I'm an Ontario taxpayer and all set to be cheesed off, but I have to say I question the editorial judgment that runs a large-type list of alleged excesses, attached to the employees' names, that includes an Obus Forme back rest and back support (total value about $200) for a guy making about $103,000 a year. Seems reasonable to me. And yes, expensing your $1.12 cloth bag from Sobey's doesn't seem smart, but why do I (or Canada's National Newspaper) care? And yes, "suit for meeting" or "ink cartridge for home printer" seem problematic on the face of it, but there might be some context in which they make sense - the attitude seems to be that just printing the list will elicit that Pavlovian reaction of fury that the editor is gunning for. From the government's point of view, at least, it seemed to work.
Surely we've got bigger things to worry about. The forecast provincial deficit for 2009-2010 is $14.1 billion. That's about 70.5 million back support sets at $200 per. Let alone the question of why we have a government agency to exploit gambling in the first place. I'm enough of a libertarian to think people should generally be able to do what they want with their money - but I have no idea why we need a government organization to run the activity. Yes, it raises revenue, but from whom and with what kind of implication? It makes the government complicit in some pretty ugly personal situations. And the efforts to "address" the social ills they're helping to create are laughable: according to their own statistics, "partnering in the education, research, prevention and treatment of problem gambling" cost $44 million, or less than $1.00 for every $36 awarded in prizes during the year (a total of $1.6 billion, in a province with about 12 million people in it). [Besides, is "partnering" the same as actually doing anything, or more like writing a guilty cheque? How much of that $44 million in fact paid for expenses of the employees of OLG's "partners"? Maybe the Globe needs to get on that.]
Finally, I think all the focus on nickels and dimes misses the best part of this story. Among the board members who have resigned (been forced to resign?) as a consequence of this is the "President and CEO of the Institute of Corporate Directors". The mission of this organization is "to represent the interests of directors — to foster excellence in directors to strengthen the governance and performance of Canadian corporations. We will achieve this mission through education, certification and advocacy of best practices in governance." Presumably the OLG is now a case study? It's also a shame not to note that of the six new directors, three are deputy ministers and two are assistant deputy ministers. So from this we can conclude, I guess, that government-owned corporations are better run by career civil servants than anybody else? Or maybe it's that the whole mess is irredeemably compromised by its confused purpose in the first place.

Quote of the day

The Toronto Star has a story today about the Ontario Lottery and Gaming Corporation's head, Kelly McDougald. One of the vignettes is about a gentleman who won the jackpot on a slot machine that was clearly advertised as having a maximum payout of $9,025, but the machine told him he had won $42.9 million. Of course, he's suing. But leaving the dubious merits of the lawsuit aside, I love the following statement by Ms. McDougald as reported by the Star:

"We did offer him prior to going to the media a settlement of around $10,000 in
recognition of the inconvenience and frustration that he felt as well as,
obviously, the dinner (for four) that was publicized," said McDougald. "It's
very clear in the rules and in the signage that we do not pay on malfunctions.
It could have easily said – because nobody controls technology – `you've won $42
billion.'"

Wait a minute - nobody controls technology? Good heavens! I thought the coffee maker was looking at me funny lately, and that explains a lot about Vista.

Poor Obama

OK, so all of the nominees for Commerce, Health and "Chief Performance Officer" for the US government have tax problems, severe enough to cause two of the three to withdraw (so far). As Oscar Wilde's line about lost parents goes, one is unfortunate but two shows carelessness. It would seem to be impossible (i) to get to Washington DC without being pretty darn well-off and (ii) to actually pay all your taxes once you're pretty darn well-off. Is this a problem with a highly-complex tax system or a more basic issue of greed?

Everything you need to know about derivatives, greed and human behaviour

Just read this article by John Lanchester in the London Review of Books from January. It's excellent reading, and has only gotten more relevant since. Without descending to cliches about hanging together or separately, we're all in deep trouble if the ends of the economic spectrum keep pulling apart - and also if we forget that the "free" in "free market" isn't synonymous with "unconstrained"!