Sunday, November 23, 2008


Watching while a lifetime of prudent savings not so slowly ekes away has darkened my outlook on my fellow man the past few weeks. It all boils down to one inescapable conclusion; greedy people will do what comes naturally to them if nobody’s watching. A variety of thoughts come to mind epitomized by the saying "good fences make good neighbors." The major conclusion among the economists is that the current financial disaster sprung from the thoroughly unregulated housing bubble. Everyone, including the individual investor, was in it for the big bucks. Caution was thrown to the winds. No rules (fences) were in place to check the greedy impulses of the participants, big and small. A microcosm of what is happening can be found by looking at the game of golf. For those of you who know me well, I love the game and play regularly. Those of us who do play regularly keep track of our efforts and post our results for all to see by establishing a handicap. The handicap consists of calculating the average of 98% of the best 10 of our 20 most recent scores. The typical pattern for most golfers is that this number, the handicap, fluctuates up or down a few strokes. The actual number, of course, depends on the skill of the golfer. For example, I tend to center on the number 16 with my handicap varying at times from 14 to 18. In other words, I am not so good at golf as many of the players I play with regularly but the one thing we have in common is that we can trust the number. If I play with Bill (handicap 10) , John (handicap 8) and Tim (20) we know that we can have a fair match by adjusting the net results of any given day's effort according to these handicaps. One guy may play a little better on a given day, but day in and day out, a fair handicap based on a system of trust, is the way to ensure fairness to all. The really good shot, the chip in from off the green, the 45 foot putt on the last hole are all rewarded appropriately if the system is in place. Most clubs have invitationals in which each member brings a guest and the member guest combination plays against all other members guest combinations. In three different invitationals I have played in the past two years, a guest of a member has claimed handicaps as high as 30 only top shoot impossibly low scores for someone who truly has such a high handicap. The net result, of course, is that such member guest teams win the event and leave everyone who has adhered to the rules walking away with a sense of dismay. The inevitable result of allowing such unregulated behavior is that people stop playing in these events and the system (the event) moves toward collapse. This is what we have going on at the present. The financial system has cheated on their handicaps. Rules need to be established and monitored. Good fences do make good neighbors.

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