Market Commentary for the week of May 21, 2012

What change?
It’s not simply the magnitude of the number, two billion dollars, nor the redundancy of these tales of corporate hubris.  No, it’s the laissez-faire manner in which business continues to ignore its customers that encapsulates a feeling of angst, disrespect and depression that overtakes an “average” observer when confronted with headlines about oil companies, pharmaceutical firms, technology megaliths, or financial institutions.

More and more there is an operational disconnect between reality and fantasy, the pursuit of profit versus the pursuit of moral suasion.  I’m afraid that having earphones in your ear, walking with your eyes forward, not giving a darn about your fellow citizens has infected a generation of leaders, and followers, so much so that we have become immune to what we are seeing and hearing around us.

Two billion dollars, no matter what the context, could cure a lot of diseases, employ a lot of people, educate a lot of students, erect a lot of bridges, provide for the welfare of a lot of indigents.  No matter that the “percentage loss” was insignificant, or that the bank’s profit margin was negligibly affected.

As we watch these episodes of avarice play out, they are held in stark contrast that our rent is due by Monday, our ailing parents need home care, or our kids are under-employed for their educational qualifications.  Greedy businesses play like spoiled brats because no one holds them accountable, morally or legally.  There is no excuse for capitalism to be bastardized by the stupid or sloppy, while economics becomes simply the pursuit of “me against you.”

Foreign domains are losing solvency, while the hoarders make more and more.  Nothing has changed since the credit collapse in 2008.  If anything, we now know how to cope with this news better.  Day by day, more of us feel as if we are just getting by.

“It was only a bet,” the bank said.  Las Vegas is a bet.  Atlantic City is a bet.  Monte Carlo is a bet.  Interest rate derivates are a synthetic affront to the charter of trust we place in our financial institutions and the mandate to be the smartest and brightest amongst us.

Pay up for better quality.

There is nothing wrong with profit.  By definition profit, paraphrased, is the money remaining after paying for all necessary goods and services we require to keep the endeavor afloat.  We need profit as an incentive to build things, invent things, create things that make life better.

When the quality of those “things” begins to deteriorate, because costs are cut or “efficiencies” are created, we put at risk a covenant of confidence required to maintain the orderly flow of economics.

If education values recede, bridge conditions deteriorate, medical care lessens, air and water quality diminishes, it stands to reason that compassion and confidence also erode.

There’s a larger issue here than money, profits, economics, et al.  The very essence of what’s fair and civil is being expanded.  What touches us all is a spiritual connection whose twists and turns can be vexing, but which, in the end, is sensible, moral, and operationally cohesive.

Ethical competition versus corruption.  Purity versus barbarism.  Wall Street’s greatest threat.