The Eighth Circle

In Dante’s masterpiece, he and the poet Virgil travel through hell. On the way they meet with a cavalcade of scoundrels suffering various punishments.

In the eighth circle, they run into a whole host of malefactors: Sorcerers, Flatterers, Hypocrites. The most memorable group were the Thieves. Some of Dante’s erstwhile friends have corrupted their own souls through their fraudulent dealings, and he describes how their essential nature changes from a man to a six-legged monster.
I was reminded of this while watching the metamorphosis of our banking system from a diversified savings-and-loan framework to a gigantic wholesale funding machine. Driven by greed and facilitated incompetent risk management, the larger banks originated, packaged, and sold scads of toxic financial waste that now must-must-be gobbled up by the Federal Government. In the process, a competitive system has been lost, and government capital and control will inevitably follow.
Dante punishes his malefactors with unquenchable fire, while reserving the worst punishment-imprisonment in glutinous ice-for traitors in the ninth circle. I think Dante was too gentle.


Douglas R. Tengdin, CFA
Chief Investment Officer
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