Why Financial Crises Will Keep Happening

Ian Welsh made a point back on 6 January 2008, one that I seem to agree with - Once upon a time, the United States had a tax code that would whack one with an income level above a certain amount at a rate of 90%; there were scandals and ripoffs to be sure (Billie Sol Estes or Robert Vesco anyone?), yet for the most part major financial scandals after 1940 in my opinion were local and contained, restricted to either individuals or small groups, not on a national scale like today. While this upper bracket tax rate had been fiddled with in the the intervening years, it wasn't until Saint Ronald that this upper tax rate declined from (then) 70% to 28% (Reaganomics. scroll down a little) - all of a sudden we get the S&L scandal, BCCI, the dot.com bubble, and now, the mortgage bubble. Funny. do you think these "bubbles" are a coincidence that the folks that took home the money (loot) were taxed on it from 10% (dividends) to 28% max, do ya think that maybe that's why these 'bubbles' occurred in the first place? Well? I quote Ian -

What would you do, or rather, what wouldn't you do, if you knew that by working hard for five years you'd have enough money that you need never, ever, work again for the rest of your life? Not just that, but for most executives, you would be rich. Want a house on the Riviera? Want to spend the rest of your life traveling? Have a hobby? Whatever it is, you'll be able to indulge it, because you'll be rich and money is freedom.

So even if, in the end, Merrill Lynch was going to be stuck with a bunch of bad debt, or Citigroup was going to have problems, why should you give a damn? Making record profits for a few years allows you pay yourself, or to be awarded commissions and bonuses, that add up to more money than a normal person earns in 45 years.

From the perspective of self-interest you'd have to be a fool not to do it. And for most people, even some CEOs, even if you don't like it you'd still be a fool not to do it, because if you opt out, someone else will just take your place, run the scams and reap the windfall of ill-gotten gains.