pointless money-shuffling

The banks’ contribution to the economy has been overstated.

There’s terrific error that crashed huge engines. Folks are hurting, economists babble, politicians cheek, and we oscillate between suspicion and credulity—blame on one edge, blindness on the other.

Good Grief. Why doesn’t anyone talk about the corruption that’s behind all of this?

Governments are supposed to regulate a whole range of activity to ensure that the public get a fair deal and are protected from naked greed. The problem is that many of the ‘regulated’ industries have so much money behind them that companies simply bribe their way around the regulators.

In this case the financial industry pumped billions into politicians and regulators to buy a regulatory regime that suited them. Look at donations to political parties and individual politicians. Look at regulators and politicians becoming employees of regulated companies, politicians becoming lobbyists, bankers becoming regulators…. Corporate insiders wrote their own legislation. It goes on and on.

What about companies that step out of line? Fines for misbehavior are a joke. Goldman’s fine is equivalent to a couple days profit. Why? That’s the financial industry. Look at oil, pharmaceuticals, agriculture, retail, media, real estate…  goes on and on.

Corruption and greed.

The whole thing stinks to high heaven. What is being done about it?

The chief financial regulators of Britain are in the news recently more for their candor than their policy. Andrew Haldane, executive director for financial stability at the Bank of England, says the banking industry is “as much mirage as miracle”.  There is something wrong with the calculations.

The financial industry has done so well for itself, in short, because it has been given the license to make a leveraged bet on property.

The riskiness of that bet was underestimated because almost everyone from bankers through regulators to politicians missed one simple truth: that property prices cannot keep rising faster than the economy or the ability to service property-related debts.

The cost of that lesson is now being borne by the developed world’s taxpayers.

Banks increased risk-taking by selling ‘insurance policies’… offered steady returns in good times but disastrous losses in especially difficult times, but these greater risks brought little economic benefit.

And oversold:

Mortgages exceed property value