The Stench of Rot

There is rot at the centre of the US economy and nobody in Washington seems aware of it. Instead, Washington's actions speak very loudly. They are selling out Main Street in order to reward Wall Street.

Here are the opening paragraphs of a NY Times article by Graham Bowley:

Even as the economy continues to struggle, much of Wall Street is minting money — and looking forward again to hefty bonuses.

Many Americans wonder how this can possibly be. How can some banks be prospering so soon after a financial collapse, even as legions of people worry about losing their jobs and their homes?

It may come as a surprise that one of the most powerful forces driving the resurgence on Wall Street is not the banks but Washington. Many of the steps that policy makers took last year to stabilize the financial system — reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions’ debts — helped set the stage for this new era of Wall Street wealth.

Titans like Goldman Sachs and JPMorgan Chase are making fortunes in hot areas like trading stocks and bonds, rather than in the ho-hum business of lending people money. They also are profiting by taking risks that weaker rivals are unable or unwilling to shoulder — a benefit of less competition after the failure of some investment firms last year.

Go read the whole article. Then weep.

The Obama administration is walking in the same shoes as Bush. Congress hasn't acted. Washington is "owned" by Wall Street and it means the poor American taxpayer is being taken to the cleaners so that billion dollar bonuses can flow on Wall Street. The stench of rot reaches up to the heavens.