Charlie Munger to the plebes: Stop bitching and suck it up!

[Raz]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

That's easy for you to say, pal. YOU haven't been forced to sell one of your yachts in a down market!

[BigBagel]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

Munger is correct. The bailout was required.

Maybe, maybe not, but it's kind of hard to take being lectured by one of the players (Moody's) in the blow up. It's kind of like a rape victim being told to "suck it up and get on with your life" by the perpetrator of the attack. That may be good advice but it's coming from the wrong person.

[blazespinnaker]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

Maybe, maybe not, but it's kind of hard to take being lectured by one of the players (Moody's) in the blow up. It's kind of like a rape victim being told to "suck it up and get on with your life" by the perpetrator of the attack. That may be good advice but it's coming from the wrong person.

BigBagel, the problem isn't the bailout that people are annoyed by. Who cares, they're just numbers. The problem is that all these FIRE folks are going around building stupidly large houses and blowing their bailout money on buying baseball teams, yachts or whatever rather than plowing it back into the economy in smarter, more cleverer ways.

We need to structure our economy so the people who are benefiting from all this money get a certain amount of security (think tenure) and power to re-invest / manage our economy at large, but don't have the ability to go and waste this money endlessly in the way that they do.

I have no problem with buffet profiting from this bailout. Hell, I think the government should just give him a % of our taxes for the heck of it. Buffet does not waste money, he appreciates the great responsibility that has been placed in his care.

Unlike these other billionaire f*ckwits.

[vinoveri]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

Munger is correct. The bailout was required.

The problem with our capitalistic system is that we need massive consumption taxes.

Rich people are great at investing money but lousy at spending it.

Ipse dixistism ... in the extreme ...

let's keep saying it over and over to ourselves until it becomes gospel "the bailout was required", "the bailout was required" .....
" a bailout IS required"

[karim0028]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

BigBagel, the problem isn't the bailout that people are annoyed by. Who cares, they're just numbers. The problem is that all these FIRE folks are going around building stupidly large houses and blowing their bailout money on buying baseball teams, yachts or whatever rather than plowing it back into the economy in smarter, more cleverer ways.

We need to structure our economy so the people who are benefiting from all this money get a certain amount of security (think tenure) and power to re-invest / manage our economy at large, but don't have the ability to go and waste this money endlessly in the way that they do.

I have no problem with buffet profiting from this bailout. Hell, I think the government should just give him a % of our taxes for the heck of it. Buffet does not waste money, he appreciates the great responsibility that has been placed in his care.

Unlike these other billionaire f*ckwits.

Blaze,

What did you think they were going to do? Be good stewards of the economy? Seriously?? You say smarter more clever way, but if it truly were smarter and more clever ways, ie made money, they would have done it... Your logic is flawed... Thats not how individuals work or think or for that matter economies.... They/capital will do what's best for themselves, not you.... Your beginning to sound as if buffet is willing to lose money to save the rest of us, i doubt it. When this is all said and done i can guarantee that buffet will be much wealthier and the common folk will be much poorer.... There is no altruism or taking one for the team when it comes to these types of things....

When the ship sinks only a fool waits to go down with it. Buffet was warning about it, but if no one listens he's not just going to do the opposite of what he knows is right for himself, his family and his shareholders...

[shiny!]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

I'm not convinced the bailout was required. But if it was, it was done BADLY. It could have, should have, been done differently. When taxpayer dollars are used to bail out banks and mega corporations, there should be a LOT of nasty strings attached. Like forcing them to show what their debts are and exactly where the money is going, forcing drastic compensation cuts, cutting dividends, forbidding bonuses and pay raises. All the bailout was, was a huge blank check from the taxpayers. It was robbery and this is one of the reasons people are so angry about it.

[karim0028]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

I'm not convinced the bailout was required. But if it was, it was done BADLY. It could have, should have, been done differently. When taxpayer dollars are used to bail out banks and mega corporations, there should be a LOT of nasty strings attached. Like forcing them to show what their debts are and exactly where the money is going, forcing drastic compensation cuts, cutting dividends, forbidding bonuses and pay raises. All the bailout was, was a huge blank check from the taxpayers. It was robbery and this is one of the reasons people are so angry about it.

Exactly, free money always finds a home that benefits its owner... Tight money can possibly help.

[seanm123]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

At the risk of having a few zings shot in my direction I believe Munger's message to Generation Spoiled may be one of a wake up call that the Party is Over in terms that they would understand.

He did write a rather interesting parable story back in Feb 2010. I would think that the readership here would have a bit more insight than
to just assume he is only of the Oligarchical type that says let them eat cake, not that he isn't trying to tell us it is good to
be a Billionaire like him with lots of influence down in Washington DC, instead of a poor sap like most of the citizenry.




moneyboxBasically, It's Over

A parable about how one nation came to financial ruin.

By Charles Munger
Updated Sunday, Feb. 21, 2010, at 3:30 PM ET

---

In the early 1700s, Europeans discovered in the Pacific Ocean a large, unpopulated island with a temperate climate, rich in all nature's bounty except coal, oil, and natural gas. Reflecting its lack of civilization, they named this island "Basicland."
The Europeans rapidly repopulated Basicland, creating a new nation. They installed a system of government like that of the early United States. There was much encouragement of trade, and no internal tariff or other impediment to such trade. Property rights were greatly respected and strongly enforced. The banking system was simple. It adapted to a national ethos that sought to provide a sound currency, efficient trade, and ample loans for credit-worthy businesses while strongly discouraging loans to the incompetent or for ordinary daily purchases.
Moreover, almost no debt was used to purchase or carry securities or other investments, including real estate and tangible personal property. The one exception was the widespread presence of secured, high-down-payment, fully amortizing, fixed-rate loans on sound houses, other real estate, vehicles, and appliances, to be used by industrious persons who lived within their means. Speculation in Basicland's security and commodity markets was always rigorously discouraged and remained small. There was no trading in options on securities or in derivatives other than "plain vanilla" commodity contracts cleared through responsible exchanges under laws that greatly limited use of financial leverage.
In its first 150 years, the government of Basicland spent no more than 7 percent of its gross domestic product in providing its citizens with essential services such as fire protection, water, sewage and garbage removal, some education, defense forces, courts, and immigration control. A strong family-oriented culture emphasizing duty to relatives, plus considerable private charity, provided the only social safety net.
The tax system was also simple. In the early years, governmental revenues came almost entirely from import duties, and taxes received matched government expenditures. There was never much debt outstanding in the form of government bonds.
As Adam Smith would have expected, GDP per person grew steadily. Indeed, in the modern area it grew in real terms at 3 percent per year, decade after decade, until Basicland led the world in GDP per person. As this happened, taxes on sales, income, property, and payrolls were introduced. Eventually total taxes, matched by total government expenditures, amounted to 35 percent of GDP. The revenue from increased taxes was spent on more government-run education and a substantial government-run social safety net, including medical care and pensions.
A regular increase in such tax-financed government spending, under systems hard to "game" by the unworthy, was considered a moral imperative—a sort of egality-promoting national dividend—so long as growth of such spending was kept well below the growth rate of the country's GDP per person.
Basicland also sought to avoid trouble through a policy that kept imports and exports in near balance, with each amounting to about 25 percent of GDP. Some citizens were initially nervous because 60 percent of imports consisted of absolutely essential coal and oil. But, as the years rolled by with no terrible consequences from this dependency, such worry melted away.
Basicland was exceptionally creditworthy, with no significant deficit ever allowed. And the present value of large "off-book" promises to provide future medical care and pensions appeared unlikely to cause problems, given Basicland's steady 3 percent growth in GDP per person and restraint in making unfunded promises. Basicland seemed to have a system that would long assure its felicity and long induce other nations to follow its example—thus improving the welfare of all humanity.
But even a country as cautious, sound, and generous as Basicland could come to ruin if it failed to address the dangers that can be caused by the ordinary accidents of life. These dangers were significant by 2012, when the extreme prosperity of Basicland had created a peculiar outcome: As their affluence and leisure time grew, Basicland's citizens more and more whiled away their time in the excitement of casino gambling. Most casino revenue now came from bets on security prices under a system used in the 1920s in the United States and called "the bucket shop system."
The winnings of the casinos eventually amounted to 25 percent of Basicland's GDP, while 22 percent of all employee earnings in Basicland were paid to persons employed by the casinos (many of whom were engineers needed elsewhere). So much time was spent at casinos that it amounted to an average of five hours per day for every citizen of Basicland, including newborn babies and the comatose elderly. Many of the gamblers were highly talented engineers attracted partly by casino poker but mostly by bets available in the bucket shop systems, with the bets now called "financial derivatives."
Many people, particularly foreigners with savings to invest, regarded this situation as disgraceful. After all, they reasoned, it was just common sense for lenders to avoid gambling addicts. As a result, almost all foreigners avoided holding Basicland's currency or owning its bonds. They feared big trouble if the gambling-addicted citizens of Basicland were suddenly faced with hardship.
And then came the twin shocks. Hydrocarbon prices rose to new highs. And in Basicland's export markets there was a dramatic increase in low-cost competition from developing countries. It was soon obvious that the same exports that had formerly amounted to 25 percent of Basicland's GDP would now only amount to 10 percent. Meanwhile, hydrocarbon imports would amount to 30 percent of GDP, instead of 15 percent. Suddenly Basicland had to come up with 30 percent of its GDP every year, in foreign currency, to pay its creditors.
How was Basicland to adjust to this brutal new reality? This problem so stumped Basicland's politicians that they asked for advice from Benfranklin Leekwanyou Vokker, an old man who was considered so virtuous and wise that he was often called the "Good Father." Such consultations were rare. Politicians usually ignored the Good Father because he made no campaign contributions.
Among the suggestions of the Good Father were the following. First, he suggested that Basicland change its laws. It should strongly discourage casino gambling, partly through a complete ban on the trading in financial derivatives, and it should encourage former casino employees—and former casino patrons—to produce and sell items that foreigners were willing to buy. Second, as this change was sure to be painful, he suggested that Basicland's citizens cheerfully embrace their fate. After all, he observed, a man diagnosed with lung cancer is willing to quit smoking and undergo surgery because it is likely to prolong his life.
The views of the Good Father drew some approval, mostly from people who admired the fiscal virtue of the Romans during the Punic Wars. But others, including many of Basicland's prominent economists, had strong objections. These economists had intense faith that any outcome at all in a free market—even wild growth in casino gambling—is constructive. Indeed, these economists were so committed to their basic faith that they looked forward to the day when Basicland would expand real securities trading, as a percentage of securities outstanding, by a factor of 100, so that it could match the speculation level present in the United States just before onslaught of the Great Recession that began in 2008.
The strong faith of these Basicland economists in the beneficence of hypergambling in both securities and financial derivatives stemmed from their utter rejection of the ideas of the great and long-dead economist who had known the most about hyperspeculation, John Maynard Keynes. Keynes had famously said, "When the capital development of a country is the byproduct of the operations of a casino, the job is likely to be ill done." It was easy for these economists to dismiss such a sentence because securities had been so long associated with respectable wealth, and financial derivatives seemed so similar to securities.
Basicland's investment and commercial bankers were hostile to change. Like the objecting economists, the bankers wanted change exactly opposite to change wanted by the Good Father. Such bankers provided constructive services to Basicland. But they had only moderate earnings, which they deeply resented because Basicland's casinos—which provided no such constructive services—reported immoderate earnings from their bucket-shop systems. Moreover, foreign investment bankers had also reported immoderate earnings after building their own bucket-shop systems—and carefully obscuring this fact with ingenious twaddle, including claims that rational risk-management systems were in place, supervised by perfect regulators. Naturally, the ambitious Basicland bankers desired to prosper like the foreign bankers. And so they came to believe that the Good Father lacked any understanding of important and eternal causes of human progress that the bankers were trying to serve by creating more bucket shops in Basicland.
Of course, the most effective political opposition to change came from the gambling casinos themselves. This was not surprising, as at least one casino was located in each legislative district. The casinos resented being compared with cancer when they saw themselves as part of a long-established industry that provided harmless pleasure while improving the thinking skills of its customers.
As it worked out, the politicians ignored the Good Father one more time, and the Basicland banks were allowed to open bucket shops and to finance the purchase and carry of real securities with extreme financial leverage. A couple of economic messes followed, during which every constituency tried to avoid hardship by deflecting it to others. Much counterproductive governmental action was taken, and the country's credit was reduced to tatters. Basicland is now under new management, using a new governmental system. It also has a new nickname: Sorrowland.

[flintlock]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

I'm not convinced the bailout was required. But if it was, it was done BADLY. It could have, should have, been done differently. When taxpayer dollars are used to bail out banks and mega corporations, there should be a LOT of nasty strings attached. Like forcing them to show what their debts are and exactly where the money is going, forcing drastic compensation cuts, cutting dividends, forbidding bonuses and pay raises. All the bailout was, was a huge blank check from the taxpayers. It was robbery and this is one of the reasons people are so angry about it.

I'm not convinced the bailout was necessary either. At least not the way it was done! What bothers me more is that nothing has been done to insure this won't happen again.

[jk]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

I'm not convinced the bailout was necessary either. At least not the way it was done! What bothers me more is that nothing has been done to insure this won't happen again.

to the contrary, what's being done assures that it will happen again. unfortunately, next time instead of banks too big to fail. we'll discover the sovereign debtor is too big to bail.

[Chris Coles]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

At the risk of having a few zings shot in my direction I believe Munger's message to Generation Spoiled may be one of a wake up call that the Party is Over in terms that they would understand.

He did write a rather interesting parable story back in Feb 2010. I would think that the readership here would have a bit more insight than
to just assume he is only of the Oligarchical type that says let them eat cake, not that he isn't trying to tell us it is good to
be a Billionaire like him with lots of influence down in Washington DC, instead of a poor sap like most of the citizenry.




moneyboxBasically, It's Over

A parable about how one nation came to financial ruin.

By Charles Munger

With the very greatest of respects, anyone who can write a fine short story like that is a very bright and intelligent individual; in which case, anything that he says, whether or not others agree with it, has much value in this ongoing debate.

Charles Munger has, we are told, made a great fortune. Perhaps it is time for that fortune to be put to a new purpose; helping those that can see the road ahead from a new perspective, to bring about the new thinking that will, eventually, bring the whole economy back into line with that old fashioned thinking. He thus needs to remember that those with the new thinking are in as much need of pump priming as the originators of the industries that carried his fortune in the first place.

[BuckarooBanzai]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

Maybe, maybe not, but it's kind of hard to take being lectured by one of the players (Moody's) in the blow up. It's kind of like a rape victim being told to "suck it up and get on with your life" by the perpetrator of the attack. That may be good advice but it's coming from the wrong person.

No "maybes" about it-- the bailout was absolutely NOT required.

[goadam1]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

Uh, what is rich? I'm well in the top bracket and had to work my ass off for it. Should I be taxed extra now? Ugh.

[Minion]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

I'm not sure if you guys want to see a more cynical explanation of why the bailout was done so quickly and poorly, but here it is in the eyes of a (successful) trader who models his system after the banksters, and seems to know a good deal about how they operate in the markets:

http://www.safehaven.com/article/180...er-or-a-player

[oddlots]

Re: Charlie Munger to the plebes: Stop bitching and suck it up!

Apparently a real letter:

Dear Mr. Buffett:

I suppose if one lives long enough, they eventually see all their living, revered heroes let them down in some way. Some succeed in this fashion far more than others. And man let me say this, “you blew me away.”

After over a decade of being a “naive” Berkshire “partner/shareholder” who always defended you, I have sold every single share I ever owned as I sadly witnessed you violate far too many of your own guidelines in the Berkshire Owner’s Manual. This was a tiny dollar amount by your standards, but at one time more than 50% of my family’s net worth.

You may be interested in knowing more details as to why I sold my shares, as the majority of letters that continue to pour in to Kiewit Plaza surely share a similar tone to this one. You and Charlie “Fear” Munger continue to misrepresent history, and that is why the public’s rage at you and at Wall Street grows with every passing day. And that level of anger will remain elevated and growing and directed at the miscreants known as the “bailout sympathizers” for as long as the unemployment rate does. We could and should have wiped out the “too big to fail” equity holders before we wiped out the tax payer. But that would have meant Berkshire’s precious book value would have taken a major hit, and so you used up all of a billionaire’s political capital and traded the ethics and morals you seemingly worked a lifetime to build, to prevent that from happening. Was that trade a good one?

And I have a big problem with that sir. When a select group of super-wealthy, elite, politically connected insiders are allowed to transgress a nation’s various moral, securities, and bankruptcy laws under the falsely dramatized “emergency” threat and guise of an Economic Pearl Harbor or a new Adolph Hitler (have you scolded FearMunger yet for his Antoinette moment to the University of Michigan kids?) to deplete its national treasury, and gets away with it....well then it is time for the “great unwashed” to be very concerned. And the guilty bailout offenders are very right to be worried of the social chaos that FearMunger warns us about, if WE are unable to “suck it up and cope!”

In perpetrating the greatest illegal transfer of wealth in the history of the world, you have lowered the capitalistic bar to an all-time historic low. This much I know: Despite your charitable efforts and investing acumen, history will not be kind to you for these repugnant actions, and your true legacy is:THE FATHER OF ALL MORAL HAZARD AND THE U.S. ZOMBIE ECONOMY

You will probably not be around to see it devolve into this state first hand, but I can assure you that as the lead architect of the immoral bailouts, you have sent me and my kids and the rest of us right into SQUANDERVILLE hell. Shame on your bailouts, shame on you for remaining silent while we failed in crafting effective financial reform, and shame on your world-class hypocrisy. There is so much more to life than the compounded annual growth rate of your book value!

Yet Another Jaded Former Berkshire Shareholder and Fan,
“JL”