In March, 2009, I wrote a blog post that collected some of my thoughts in reaction to the economic collapse we had just experienced (and are still feeling). In light of the news this week that the much-admired and rarely-wrong CEO of JPMorgan is not immune from the laws of nature and market-places, I thought back to a section of what I wrote that day:
The whole “bigger is always better” thing has now been exposed as a nice theory, but a failed reality. Why? Because all the algorithms and information technology and most brilliant programming in the world can’t overcome the bugs of greed, hubris and randomness that can best be summed up in the vernacular, “sh*t happens.” How did we get to this place where massive corporations that have enriched the investment bankers, lawyers, investors and executives who profited through merger after merger now must be rescued by taxpayers because they are “too big to fail”? If they are too big to fail, I suggest we demand back the legal and banking fees and executive bonuses, etc., that were doled out to those who made the companies “too big” in the first place.
Alas, that won’t happen. So the only thing we can do is refuse to believe the investment bankers and executives who, no doubt, will continue their mantra that bigger is better, even when it’s not.
For the rest of my life, I will believe that a company is too large when its CEO can’t explain every way it makes money, including any exotic financial instruments on which it might slap a label like “derivatives.”