If I needed any ammunition to support my argument, I found it while cleaning out my closet yesterday. I unearthed an old bowling score sheet, dating back to my college days. (I found it next to a Valentines Day card from my father dating back to the same era; it read “Up Freud’s. Love you, Dad.”) The names on the yellowed paper from the Columbia University bowling alley were mine, my brother’s, and the name of a friend, who is now doing time for something that only cost Tom Daschle a Cabinet appointment.
But to some extent it is also because I know a lot of people in the gambling industry. Say what you will, but even after the wild popularity of televised poker, being a professional poker player still hurts you if find yourself in the unfortunate position of going up against a jury of “your peers.” The fact that gambling and poker still live in the legal grey zone doesn’t help matters, either. But I guess I also have to acknowledge that gambling, like capitalism, can encourage people to push the edge of the legal envelope. The more time you spend on the edge, the more likely it is that you’ll end up with a paper cut.
Of course I’m not sure how this all translates to the latest arrest from my poker world. A year after his parents were found beaten and stabbed to death, Ernie Scherer was arrested last week for their murders. I’ll reserve judgment until judgment is handed down. But it doesn’t look particularly good when your last 10 Google searches were for “countries that don’t extradite to the U.S.” Of course in my view, the most damning evidence is that he still owns a Camaro. If that isn’t a tell…
Ernie’s occupation won’t help him any in court. Although his former career was probably more damaging: I’d hate to be a mortgage broker going on trial in California these days. In a recent UK poll, banking was rated the third least respected occupation, putting bankers just ahead of prostitutes and convicted felons. If you ask me, prostitutes are getting a bum rap. (Sorry Pete, I’m sure they didn’t mean you)
After reading the leaked research memo from Deutsche Bank’s economist, Joseph LaVorgna, I toyed with whether the banks could be held on kidnapping charges - because it sure read like a ransom note. It basically suggested that if the U.S. government didn’t start overpaying for toxic assets, the banks would continue to trash the economy and drive unemployment higher. It argued that taxpayers were going to get fucked either way and we needed to just get over it. Or evoking Tina Turner, the banks could do this nice and easy or they could do it rough. I’m not making this shit up, you can read it here.
LaVorgna (I once knew a bookie with that name - couldn’t be the same guy, could it?) is absolutely right in one respect. Taxpayers are fucked. And it’s because in this particular game, we have mispriced our risk. The game is called “too big to fail.” Banks and businesses that are “too big to fail” have no downside risk. They get to keep all their winning pots. But every time they donk off their chips, we’re stuck paying for their rebuy. This is why there should be a “too big to fail” corporate tax bracket. Every time a near monopoly gets rubber stamped approved by the FTC or every time a bank bloats under the allowances in the Gramm-Leach-Bliley Financial Services Modernization Act, they should automatically get bumped into a higher “too big to fail” tax bracket. I’m not sure what the exact rate should be, but words like “exorbitant” and “prohibitive” spring to mind. In gambling terms, the big banks have been freerolling. In economic terms, it’s called free riding. But whatever you want to call it, taxpayers have to improve their pot odds in this game before we go totally busto.
Photo Notes; Ernie Scherer at the 2007 LAPC and at the 2007 WSOP.