Paul Krugman has written an op-ed in the NY Times that points out that -- yet again -- Obama is trying to be the nice guy, mediator, feel good kind of leader. As Krugman points out, this isn't the right approach:
On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”
Well, I wish he hadn’t said that — and not just because he really needs, as a political matter, to take a populist stance, to put some public distance between himself and the bankers. The fact is that Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K.
More than that, reform actually should hurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America.
The financial industry has grown from something like 12% of the US economy to 35%. It is bloated. It is sucking the oxygen out of the air. And it is filled with corruption and greedy people who think "making" a billion dollars in bonuses still isn't enough pay for their "talents". This bubble needs to be burst. These guys should be brought back to earth. They have caused $9 trillion in damage to the world's economy. They are criminals on the scale of a Hitler, a Stalin, and a Mao but Obama is treating them with kid gloves!
What’s the matter with finance? Start with the fact that the modern financial industry generates huge profits and paychecks, yet delivers few tangible benefits.
Remember the 1987 movie “Wall Street,” in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier.
These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true.
Here's Krugman's "bottom line"...
But the fact is that we’ve been devoting far too large a share of our wealth, far too much of the nation’s talent, to the business of devising and peddling complex financial schemes — schemes that have a tendency to blow up the economy. Ending this state of affairs will hurt the financial industry. So?
2 comments:
Wall Street is fighting to survive and grow and this growth is at the expense of the rest of the economy. I believe that their resistance to being "pruned" is natural, but if it isn't cut back it will destroy itself. Too much plant and not enough root to support it. Sorry, kind of a sloppy analogy... But, they are facing their own destruction if they don't take care.. I am with you and Krugman; its OK if the financial industry suffers a little and Obama should be siding with the working class and not Wall Street because the average American doesn't care about what is good for these greedy people.
I think that the attitude toward work and jobs in general in this country has led to this financial heavy economy. People don't want to earn a living at some boring or labor intensive job in some plant building something. They don't want to live within their means either, so we have this current crises with no jobs and heavy debt. The housing crises is an example of this; flipping and speculation are a big part of the bubble. Their was a lot of house buying, but no long term investment in a HOME. It was all for a quick buck. I think we have lost sight of what the real American dream is.
Did you see the headline about the Japanese bankers being in opposition to regulation ?
Thomas: I didn't see the article on Japanese resistance to banking regulation. Hmm... Just shows they run their lives on a different wave length. Funny place, they've had a recession/depression for nearly 20 years. You would think they would join the rest of the world.
I'm heartened by an article by Barry Ritholtz saying that the SEC will take down Goldman Sachs. He gives 10 reason. Here is reason #2. This looks good to me:
Robert Khuzami is a bad ass, no-nonsense, thorough, award winning Prosecutor: This guy is the real deal — he busted terrorist rings, broke up the mob, took down security frauds. He is now the director of SEC enforcement. He is fearless, and was awarded the Attorney General’s Exceptional Service Award (1996), for “extraordinary courage and voluntary risk of life in performing an act resulting in direct benefits to the Department of Justice or the nation.”
I sure hope the banks get taken down. I own stock in a bunch and despite that I'm still hoping the government regulates. Why? Because it will cost me less in the long run if the government makes business act right than to let another $9 trillion dollar meltdown happen. I'm still down by several hundred thousand dollars and have no pension (hi-tech companies usually have no pensions). So I depend on the economic system working properly and returning investors a fair return. I want banks and all businesses properly regulated!
I would love to have the deadbeats who ran it into the ground stripped of their bonuses and even jailed if fraud can be proved. But that may be hoping for too much. Just stop the destruction of wealth, the looting of pensions, and the theft from stockholders by these fraudster CEOs!
Post a Comment