SAN DIEGO (ETFguide.com) - How will 2009 be remembered? We could
say it was a year characterized by a global resurgence in risky
assets like emerging market stocks (NYSEArca: VWO), high yield
bonds (NYSEArca: JNK) and commodity sector funds (NYSEArca:
We could also say that 2009 was a year of financial foibles or
mishaps. And for many Americans, the $787 billion stimulus package
that was passed into law tops the list.
Here's a short list of other breathtaking foibles that none of
us should soon forget:
'Bankers Are Doing God's Work'
In a November interview, Lloyd Blankfein, CEO of Goldman Sachs (
) told The Sunday Times, 'I'm just a banker doing God's work.' I
cannot speak for the masses, but I'm confident most gluttonous
pagans would probably agree with Mr. Blankfein's
With what's perhaps one of the most blasphemous misstatements
cataloged anywhere, Blankfein didn't just baptize himself in fire,
but he instantly became Lloyd 'Blankbrain.' Not even the best
public relations attempt by Goldman's handlers could rescue him
Higher Education Turns Low
Want to know one reason why so many business/finance graduates have
a deranged perspective? What happened earlier this year at the
University Of Pennsylvania's Wharton School of Business sheds light
on the matter.
Wharton's administrators had the audacity to invite former
Merrill Lynch CEO John Thain to its campus to lecture business
students about the 'American Dream.' Hey, wasn't this the same guy
who paid $1.2 million for an office remodel that was outfitted with
a $35,000 toilet and $1,400 waste basket? And never mind in 2008
how Thain demanded a $10 million bonus from his former employer - a
company that at the time was flailing. People like this should be
banned from college campuses, not welcomed with open arms!
During the speech Thain made it his duty to criticize financial
regulators and to defend his dead legacy. At the very least, Thain
should've taught business students to always get at least three
competing bids before hiring a general contractor!
2009's 'Man of the Year'
Time Magazine's declaration that Ben Bernanke, the sitting Federal
Reserve Chairman, was 2009's 'Man of the Year' is laughable. That's
a pretty big title, especially for someone who told Congress
roughly one-year earlier with millions watching that the sub-prime
mortgage debacle was fully contained. Wow. How wrong was that?
And then too, there's Ben's total lack of presence - you know
the kind we usually associate with greatness. Don't you think to be
'Man of the Year' of anything, at a bare minimum, your identity
should be readily recognizable to the average citizen? If you
surveyed pedestrians about Ben Bernanke's identity, most of them
probably couldn't tell you who he is.
Maybe what Time Magazine's editors really meant is that Ben
Bernanke was 2009's 'Least Offensive Banker of the Year.'
P.I.G.S. Have Rights Too
After doling out a $165 million in bonuses to employees, bailout
kid extraordinaire A.I.G. (
) created a national uproar. If this is price for corporate
failure, what's the reward for succeeding? The only explanation
offered is that the employees responsible for destroying A.I.G. had
already left the company and the $165 million was to reward the
ones responsible for keeping it an operating
Not only was a $165 million bonus a bad public relations move,
but it highlighted the ongoing inability of the U.S. government to
curb Wall Street's insatiable appetite for more. The once
invincible insurance giant single handedly converted itself from
A.I.G. into 'P.I.G.'
S.E.C. Drops the Bomb...Again
A year doesn't go by in which the Securities and Exchange
Commission or S.E.C. threatens to revise a little know mutual fund
rule called 12(b)-1 and 2009 was no different. Ever since it was
invented (with the S.E.C.'s help) in the 1980s, the 12(b)-1 fee has
been bombing fund investors. But while the S.E.C. talks a tough
game about protecting investors from Wall Street, its gridlock and
inaction are hallmarks of its existence.
Inhis just updated edition of 'Common Sense on Mutual Funds',
author John Bogle estimates that 12(b)-1 fees sucked around $28
billion from mutual fund investors in 2009.
Here's a regulatory suggestion: The S.E.C. should immediately
rename 12(b)-1 fees to B-52 fees, because it better describes just
how badly they bomb people's investment portfolios. Heck, this one
revision alone could easily save millions of mutual fund investors
from going up in smoke.