What sick, wicked culture produced such people? I said of the greedy Wal-mart stampeders who killed a guy. When hoi polloi rampage at Wal-mart, driven to behave in berserk ways by their greed, we're shocked. But what do we call it when pinstriped professionals on Wall Street and in the City and their affiliates worldwide carry out their own greed-driven version of same, only far more politely and destructively to the common good? Well, when you find a name for what we're going through now, there will be your answer.
Take a look at this analysis of the current situation by Yale economist Robert Shiller. He's pretty soft-spoken, but talks with the anxious self-control of the maitre'd who has come to inform the diners at the captain's table that ship has struck an iceberg, and would they kindly proceed to the lifeboats. He lists the ways that the current economic situation parallels the Great Depression, and says this thing could be with us for a long, long time. One interesting wrinkle: he says the crisis is more explainable as a function of social psychology than fiscal policy. He compares the US and the UK economies, both of which have been following the same boom-bust trajectory, even though monetary policies of the two governments have been different. Shiller says that we the people got it into our heads that investments are our salvation, and behaved irrationally because of it. Take a look:
Meanwhile, the reader who sent me that item also passes along this piece from Robert Peston, the BBC's financial editor, who talks about what it means that the British taxpayer now owns majority shares of the Royal Bank of Scotland. The reader suggests that this might be Citigroup's fate in the US. Peston writes:
The commercial judgements of Royal Bank's management will inevitably be conditioned by the inescapable fact that we the taxpayers now own the bank.That's about a great deal more than whether it pays bonuses to senior executives or how much it lends to small business and homeowners (which is where the government has already exerted explicit pressure).
It's about fundamental questions of culture and about how much risk the bank is prepared to take or is allowed to take by the new proprietor.
Those who run banks such as Royal Bank have for years seen themselves as creators and manufacturers of financial products, companies that can generate incremental wealth and can grow faster than the underlying rate of the economy.
They didn't want to see themselves as the infrastructure of the economy, that couldn't and shouldn't attempt to push up their profits at an accelerating rate. Somehow it was a bit too humiliating to be no more than the pipework for the real generators of wealth, companies with genuinely new services, real products and real technology.
So bankers created and exploited new "financial technology" that enriched themselves (for a while, at least) and was supposedly benefiting all of us by providing unlimited quantities of credit at astonishingly cheap rates.
Much of that technology - the collateralised debt obligations, the collateralised loan obligations, the credit default swaps, the structured investment vehicles - generated colossal losses, hobbled the global banking system, and is part of the reason why taxpayers all over the world are now propping up wounded banks on a mindboggling scale.
So whether they like it or not, most banks and bankers are destined to lead a quieter, duller life for many years.
Which, many taxpayers would say, isn't such a terrible thing.
If our banks simply concentrated on the very basics - taking deposits, providing simple loans to customers they actually know, moving our money to where we want it to go - would that be so disastrous?
It will fall to the taxpayers, I suppose, to put the hinges back on the doors. You watch what will happen, though: Washington will not force the management of these firms, which drove them and the economy off the cliff, to answer for their actions -- even though Washington -- that is, me and thee -- will be bailing them out.
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celticdragon,
As often as not -- and maybe *more* often than not -- the "pinstriped professionals" that Rod refers are good Democrats, not good Republicans.
They certainly gave much more of their money to support the Lightworker campaign than they did to support the McCain campaign.
I'm wondering where you think the Reverend's "economic team" came from.
Straight from the not-for-profit sphere?
Straight from doing charitable work?
Straight from serving soup in an almshouse?
I think not.
PS: It's also worth point out that the aforementioned "pinstriped professionals" share all of your secular progressive views -- views which are underwritten by, and which in turn merely serve to enable, precisely the economic paradigm with which you feign to disagree. This is but one of many reasons why these folks are Democrats as often as not.
I just thought of a skit (sorry it's in bad taste): the newsreader says "It was a relatively safe Thanksgiving weekend, with 30 traffic fatalities nationwide, and five shopping-related deaths, down one from last year". Someone good could do this really well.
I second both Alex and Michele above.
Augmenting Michele: Shiller meanders around a restatement of the obvious. Boom and bust history is replete with examples of group-think irrationality. And a ton of others had forecasted the current bust.
Augmenting Alex: A transparently capitalistic response to the crisis would be to allow the affected businesses to fail. But not only that, the situation would not have evolved to this point in the first place in a pure marketplace.
Because the underlying risk would have remained in the private sector where it belonged. Once risk could be transferred to the government, an endless do-loop of derivitization was initiated with almost infinite demand. Government offered itself up as the bottomless risk sink.
Once the music stopped on the real estate ponzi scheme, the player without a chair was the government. Surprise, surprise.
No government risk sink - no ponzi scheme. No ponzi scheme - no crisis. Unfortunately, we needed unfettered capitalism applied to the government enabled pathological real estate game years ago.
Girls gone wild. Toys are us. Every child a wanted child. It's my party, I'll cry if I want to.
Ah come on, folks. Everyone knows this decline and fall of civilization as we know it is all the fault of them homerseckshuls gittin' hitched. It's unbridled seckshul libertinism that caused this death. Seckshul libertinism created this economic policy o' Shrub's. At least that's what many other threads have wanted us to believe, anyway.
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