Back in 1987, the movie Wall Street introduced the central meme of the 1980's and after to the general public: "Greed.... is good." Christoph Uhlhaas, writing for Scientific American, wondered about that bold and unsubstantiated assertion, claiming that the large number of successful transactions on sites such as eBay refutes the common wisdom regarding "Homo economicus (economic man)" being "a rational, selfish person who single-mindedly strives for maximum profit."

Studies led by economist Axel Ockenfels of the University of Cologne in Germany, conducted with economist Gary Bolton of Pennsylvania State University, tend to support that doubt. They found through their studies that a sense of fairness is the largest determinant in the conduct of transactions, but that the balance between fairness and selfishness can be manipulated.

Such manipulations are rife within the collapsing home mortgage industry. After share trading of American Home Mortgage was halted by the New York Stock Exchange, American Home Mortgage's lenders (Bank of America Corp, JPMorgan Chase & Co., Bear Stearns Cos, Credit Agricole SA's Calyon affiliate, and UBS AG) cut off their credit, leaving AMC holding worthless contracts for new home loans valued at over $300 million, with as much as another $500 million in existing loans no longer secured.

Other lenders, MGIC Investment Corp and Radian Group Inc, are now tilling the same barren patch, facing the necessity of writing off over $1 billion in loans themselves. New Century Financial Corp. has already filed for bankruptcy protection, and Countrywide is struggling to stay on their feet.

That's what they get for allowing their greed to overrule their traditional conservative practice of not making loans to people who could not document income or assets just because profits were (temporarily) very lucrative when doing otherwise.

Facing up to the inevitable (something the Bush administration should be doing about so many things), American Home Mortgage Chairman Michael Strauss closed the business, terminating over 7600 employees, including over 1400 in Melville, NY and 155 in hard-hit Northern Indiana. In addition, thousands of housing hopefuls are now back in the market seeking sheltering loans in a much harsher economic environment.

But don't cry for these mortgage brokers, who lost their jobs to sub-prime lending. Michael Strauss shares their pain having experienced the loss $42.8 million in 20 minutes the other day before trading was halted. That sense of fairness referred to by Professors Ockenfels and Bolton leads one to feel sympathy for everyone affected by the collapse of American Home Mortgage - until one discovers that Strauss provided for himself to the tune of $1.8 million, an amount that none of his employees can expect to see.

I guess that proves that greed really is good - if you are the sole beneficiary. Otherwise, ask not for whom greed toils, for it does not toil for thee.