Wednesday, May 5, 2010

And These Are the Leaders?

Here's a bit from an article in the Wall Street Journal that points to several members of the US Congress who have taken investment positions to profit on a fall in US stocks and/or bonds:
Some members of Congress made risky bets with their own money that U.S. stocks or bonds would fall during the financial crisis, a Wall Street Journal analysis of congressional disclosures shows.

Senators have criticized Goldman Sachs Group Inc. for profiting from the housing collapse. And Congress is considering legislation to curb Wall Street risk-taking, including the use of financial instruments known as derivatives and of leverage, or methods that amplify returns.

According to The Journal's analysis of congressional disclosures, investment accounts of 13 members of Congress or their spouses show bearish bets made in 2008 via exchange-traded funds—portfolios that trade like stocks and mirror an index. These funds were leveraged; they used derivatives and other techniques to magnify the daily moves of the index they track.

There's no evidence the legislators and their spouses used privileged information or failed to follow rules on disclosure. Congressional rules permit lawmakers and their families to invest in—or bet against—publicly held companies they oversee through committee assignments, as well as broader markets or indices. While some made money, others lost.
Aside from possibly criminal "insider trading", what bothers me is that the leaders of the country are betting that things will get worse. Their job is to prevent this. In fact, their job is to make the country better, not worse. To find out that they are betting it will get worse is pretty disconcerting.

Why were they elected to "lead" the country if they are planning on getting rich by betting that the country is sinking?

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