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Banbury Cross

a pillow for lost thoughts...

Post details: Tour de Finance

Tour de Finance

Lance Armstrong won Tour de France seven times. A feat worthy of emulation for armies of racing enthusiasts all over the world. I bet the French mountains still salute the indisputable general of fast bicycles. However, in January of this year, Armstrong admitted that the doping charges previously filed by the United States Anti-Doping Agency were in fact correct. As a result he was banned from competitive cycling for life. And rightfully so. The sportsmanship and fair play are a big part of the universal appeal of sports, so the purity of athletic achievement is paramount. You win based on your skills, talent and hard work, not based on having a trainer who is well versed in the magic of organic chemistry. Cheaters should not be emulated.

So far so good. But I wish we were as principled in other areas of life as well.

For the fifth year and counting, our too big to fail banks have been on a winning streak. Their trading prowess knows no limits, their profits keep waxing and their executive pay is at the historical high. At the heart of this miracle is the never ending flow of increasingly cheap credit and more specifically the fact that these financial behemoths can borrow money virtually for free due to the extraordinarily accommodative policy of the central bank. Consider this socio-economic travesty from a little guy's perspective. You borrow a cool billion from the Fed at 0%. You invest in virtually risk free Treasuries at 3% and low and behold, you are "making" $30 million a year without having to move a finger. Say bye-bye to your gray cubicle and hello to a hammock gently swaying between a pair of Caribbean palm trees. Wouldn't that be grand?

But not all businesses are created equal. Do you think fisherman in Louisiana have access to such generous uncle? Nope. Do car mechanics in Detroit, doctors in New England or computer wizards in Silicon Valley enjoy such generosity? I do not think so. They make their money the hard way, by earning it. The big banks - while having a legitimate business as well - get their big advantage from simply positioning themselves closest to the splashy monetary trough. The global wealth flows are mighty rivers and skimming them seems easier than ever. This well orchestrated charade is really nothing else than a case of financial doping. Yet instead of shaming these guys, like we did Lance Armstrong, we adulate them and pronounce them heroes of our twilight recovery.

Can you say "double standard"?

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