Juggling money is still America's biggest growth industry, according to the new earnings boom for Goldman Sachs, Citigroup, JP Morgan Chase and Bank of America, who only months ago came to Washington to fill their begging bowls with taxpayer bailout funds.
Cranky Paul Krugman says such news "shows that Wall Street’s bad habits--above all, the system of compensation that helped cause the financial crisis--have not gone away" and "that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely."
Back to business as usual, the big firms are generating huge profits from trading and underwriting securities to make up for the failure of those who are losing jobs to keep up with payments on mortgages and credit cards.
At the same time, the pain is being spread equally to prudent retirees who saved without gambling in the stock market but, thanks to the Fed's concern for Wall Street's ability to keep wheeling and dealing, are earning a fraction of one per cent on their hard-earned money, much of which will now go to keeping up the huge bonuses of those who shuffle it around.
Is this a great country or what?
Subscribe to:
Post Comments (Atom)
1 comment:
"Executive greed", "excessive risk-taking" and the like are simple, empty terms that merely beg the question. Saying that "greed" caused the current economic crisis is like saying "gravity" caused the ball to be dropped. It is up to us to keep the ball juggling, greed/gravity does help but it cannot do the whole task alone.
So what are some of the larger issues, at stake?
Fannie Mae and Freddie Mac, of the notorious "government-sponsored enterprises" (GSEs) fame, are institutions whose only practical reason for existing was to serve as a vehicle to enrich certain congressional members, stockholders (who had recieved that stock mainly through the politics of pull, not capitalism) and assorted political hacks. That, however, was the least of our worries - undoubtably, they had full right to enrich themselves as they saw fit, what they did to do that however is horrific bordering on a high crime against. What they did was accomplished through blatant manipulation that any private company would not be able to get away with.
A quote for you to ponder.
"Repackaging them as triple-A-rated mortgage-backed securities and throwing them onto the broader securities market. This way, the entire system, from private lenders to Fannie and Freddie to securities firms, was systematically stripped of all the natural private incentives that, under normal circumstance, would be present to balance financial risks along the entire chain." - Thomas E. Woods's Meltdown
Succinctly, blame Beltway, not Wall Street.
Post a Comment