Yesterday Bear Sterns, today Lehman Brothers. I guess every cloud does have a silver lining.  No, I’ve got nothing against Lehman, and take no particular pleasure in watching Lehman suffer.  But…

What happens to a 30 year old trader who gets a $5 million bonus?  Does he put it away for a rainy day, thinking that he’s been exceptionally fortunate to receive such largesse?  Nuh uh.  He buys a fine house with a large garage to park his shiny new Ferrari.  Make that Ferraris.  Because he is a market genius, he anticipate that next year the bonus will be $10 million, and he will buy whatever he pleases.  Masters of the Universe are entitled to the simple pleasures man has to offer.

But every once in a while, some force comes along to knock the Masters on their butt.  They don’t know how this could be possible, but it can be poetic when it happens.  It shakes their world, at least a little, to see their holdings decline overnight.  The fear of being like everyone else, of having the Ferraris but not being able to afford the gasoline, permeates the air.  They can’t imagine every being ordinary.

Until the fear and loathing spreads to Wall Street, and hits the boys and girls, the men and women, personally, it’s all just a game played with our money.  When it’s their money, everything changes.  They were sold on the concept that up or down, they still get their commission.  Good economy or bad, they still make their deals.  No one ever told them that their lack of diligence, their excesses of greed, could come back to bite them in their personal derrière. 

Only when the Masters of the Universe come to the realization that they are not immune from the forces of avarice that can undermine life for us common folk do they take it seriously.  They don’t give a hoot about our pocket book, but they care a lot about their own.

Is it time for massive failure on Wall Street, banks collapsing under the weight of the same greed that gave birth to the subprime crisis, watching their portfolios implode because there is nothing beneath the surface of faked appraisals and scam applications?  Perhaps it is, and if so, perhaps it’s time. 

Whether it’s Lehman or Goldman Sachs doesn’t matter to me.  They all need a little lesson in humility, to recognize that there are real people on the other end of those account numbers who will bear the brunt of their bone-headed decisions while they believed they could do no wrong.

Anybody in the market for a slightly used Ferrari cheap? 

Update:  Not new (unless you haven’t seen it already), but an explanation of how the subprime crisis happened.  Thanks to  Volokh and Reasonable Doubts.