A Letter From the Thugz

Dear Mr. Geithner,

I have been on jury duty recently. Nevertheless, I have been observing your first few weeks in office. I figured you could use a little help.

I, personally, don’t have the expertise, so I thought I’d lean on a few acquaintances who have weathered several economic storms.

What’s that? You say you have your own friends? Well no disrespect, but I think your mentor Mr. Rubin may be sitting next to Milton Friedman in the “Economists Whose Ideas Have Expired” benefits line.

“The moral is: don’t ever take the joy of death away from the public.”

I’m talking about a group of financiers who spent years toiling in an economic sector where the government played no productive role — other than to impede progress with regulation and arbitrary use of the law. Not only did these successful entrepreneurs make beaucoup dollars in this climate, but they developed ways to actually make the government work to their own advantage. Indeed, they operated in one of the world’s only true “free markets.”

What’s that? You have also had experience working in a free market? You too have been fighting the state? Again, no disrespect, but my financiers didn’t run to the Treasury when the going got tough — unlike the so-called “captains of industry” whom you listen to.

Mr. Secretary, let’s face it: you need real experts, those who have felt the consequences associated with moral hazards, those who have found out that mistakes in markets mean no skin in the game (or no skin at all, for that matter).

If you wish, you can learn more about these consiglieres by looking at some of their earlier commentaries. “The Thugs” were kind enough to watch Season Five of The Wire with me, offering their feedback on the David Simon‘s depictions of inner city Baltimore. Full disclosure: they had once been players in the underground economy, but they are now retired and spend most of their time in church.

However, they have agreed to return to the couch and channel their wisdom for the benefit of the country. By the way, you should know that they are big fans of your work at the New York Fed. Most of them fared nicely in the late 1990’s by catering to the growing white-collar workforce who demanded cocaine, escorts, sexual services, etc. Of course, since the most of these customers worked in the financial services industry, my boys feel like they owe you a solid.

They plan to get together weekly to discuss various aspects of the financial crisis, and of course your rescue plan. But I know you are in a wee bit of a rush, so I leave you with a little early advice.

The unanimous opinion among The Thugz was that you must base your work around a time-tested law of ghetto capitalism: losers must die in full view. What? This doesn’t make sense. O.K., well, let me explain. Your first mistake (more accurately, your predecessor’s error) was to mix the bad apples (banks) with the good (banks). By doing so, you forgot what makes capitalism so much fun: winners win at the losers’ expense, and everyone gets to watch and laugh. Sort of like public hangings, except reported on the financial pages. Otherwise, why read The Wall Street Journal?

The moral is: don’t ever take the joy of death away from the public. Because if you don’t see losers in pain, you begin to think the game is rigged. And we all know the game is fair, open, and transparent … yes?

I’ll let you mull on this while The Thugz get ready to take on the first issue: executive compensation. (C’mon, you didn’t think they were dumb enough to let that one pass, did you?)


Hello From DC

This series will be awesome! Sudhir you've been gone too long!


Milton Friedman's ideas have expired? Which ones? I suggest you read the Phil Graham piece in the Wall Street Journal

Imad Qureshi

This piece is awesome (is awesome the right word to use here? Pardon my English)


Can't wait, bring 'em on.


I can't wait to hear more . .


The only point I have is that Milton Friedman wrote in the 60's and in the early 80's pointed out that his material was time specific, because people were taking his ideas too far.


Dan C @ comment 2 - Recent events based on Phil Gramm's phony "free market" principles (i.e. State sponsored corporate welfare somehow forming the basis of the "free market") have pretty much been stripped of his clout concerning knowledge of these issues, no? ... fascism (state controlled capitalism) is not a free market


i just finished your book. this is going to be great. hang 'em high baby!


"Because if you don't see losers in pain, you begin to think the game is rigged."

This line is just brilliant :)


Although these Thugz may provide some entertaining insight into the current economic meltdown, I don't believe we should be glorifying criminal activity and expertise as a guise to offer suggestions to Mr. Geithner. We are well aware of the excesses and, in some cases, criminal activity that has led us down this path, why do we need play-by-play analysis from more criminals?

I see no logical reason why Mr. Geithner should take advise from unnamed criminals. This is just shameful ridiculous.


Brilliant! Thanks for some giving me something laugh at. I'm in the residential construction industry so I don't laugh as much as I used to.


@DanC - yes Milton Friedman's ideas have expired. Quoting the vice-chairman of a bank that was just convicted of allowing 52000 Americans to illegally evade their taxes is not a good argument to the contrary.

the Gooch

Sounds like the Thugz are of the Austrian school. I back it.


Oh, this is gonna be good.

But I agree with #2: Milton's ideas haven't expired yet. In fact, what happens when government screws up the private sector tends to reinforce what he had to say.

I hear a lot of the statists in denial about the state role in the housing bubble and the first wave of economic troubles, but it sounds like a lot of smoke and mirrors to me.



I notice that most of out public taring and feathing has gone to private people like Madoff, that Texas guy, and the peanut man from Georgia (possible notable exception being the autoindustry). What do the thugs think about that as a substitute for corporate taring?


Sorry, Dan C, Gramm (not Graham) is "one who created the problem" and his 'ideas' to solve the problems only create more problems. It's insane.


AND.... nowhere does Gramm mention the true cause of the problem--that executives looted their own company's reserves through their 'compensation' packages, leaving the public holding the empty bag.


Friedman's greatest idea has certainly not expired:


Freedom will never expire, Sudhir.

So according to you and the thugz, foreclosures should be public spectacles where we watch and laugh?


Brilliant. I want to hear more from real free marketeers!


Excellent point about dying in public...so true. My beef:
"Milton Friedman in the “Economists Whose Ideas Have Expired” benefits line."

Sorry; it's so wrong, and so odd, really, that anyone could write that. It implies blindness or lack of education.