The only lies exposed by that fiasco is that of the mortgage applicants lying on their loan-applications. Most of those folks have never been to Wall Street.
Not so. Back in about 2005 or so, I remember reading articles about NINJA mortgages -- No Income, No Job, No Accepted (or No Income, No Job or Assets). At the time I remember thinking it was a stupid idea, and made no sense at all.
The lenders were going on a drunken rampage giving loans to anybody with a pulse. But they knew they were doing this.
But, make no mistake, this wasn't borrowers lying on their applications. This was lenders approving any application which came across their desk, and was known to be a risky investment at the time.
What subsequently happened was that junk debt, (which they knew was junk debt, and was junk debt because they were just giving anybody with a pulse) was then bundled up into derivatives, treated as if it was AAA rated debt, and then sold off onto the market. And then everybody else bought bad US debt, and it trickled throughout the world.
Essentially the US lenders got themselves in deep shit, packaged up that shit as if it was caviar, and then let everybody else deal with the problem.
That, my friend, was Wall Street. And it was more or less theft writ large. They lied about the risk of their securities in order to get other people to buy them.
Basically they sold magic beans to the rest of the world, so that the debt was no longer their problem. When that debt collapsed, it undermined the house of cards which had been built on it.
"High Frequency Theft."
No lies there. In other words, fail.
You don't think the act of skimming money out of the market by making a large number of trades to allow yourself to do arbitrage and exploit the fact that you have direct access to the system is theft?
I think when they do this they more or less inject themselves as a middle man who creates no value, and distorts the market to their own ends. I see HFT as nothing more than institutionalized theft.
They don't 'earn' it, they don't generate value, they just sit in the middle and take the vigorish and act like they're entitled to it. It's just siphoning money out of the economy for their gain.
My person may be anecdotal evidence, but the Economist's article puts more solid statistics behind it.
My problem with the conclusion of the article is that it places the issue at the feet of Socialism. Since they only studied East Germany, they can't really say it was Socialism which caused it, only that in this particular case.
I'm not defending Socialism -- at least, not the form the Soviets were following. But, as you say, the attitude of "it's OK to screw the government" can spill over into a more generalized "it's OK to screw anybody".
I don't dispute that the people who grew up in East Germany were more prone to cheating a little. I do disagree with the conclusion that this was the result of Socialism -- I don't think they had enough to make that claim.
If it was true, I would assume you, and everybody who grew up in such a country would also be prone to cheating.
So, either you're a cheating bastard, or their conclusions are overly broad. ;-)
Pick any place with a failed economy, or where the penalties of cheating are outweighed by the rewards, and people will simply cheat. No matter your system of government.
Be that Wall Street, or East Germany.