What’s so special about Wall Street?
I drifted to sleep last night thinking, “Just what IS the crisis the White House rescues?”
The Wall Street Journal has the prepared testimony of Ben Bernanke and Henry Paulson. Neither one spells out exactly what sorts of financial institutions are in difficulty and how that difficulty translates into problems elsewhere in the economy. Roger Lowenstein, who dares to ask what the finance industry that makes its health a source of huge concern to the rest of us.
Steve Landsburg, The Atlantic
We are embarking on the most radical transformation of the American economy since the New Deal, committing hundreds of billions in taxpayer money to save banks and other financial institutions from the consequences of their own bad investments. This, we are told, is the cost of averting a crisis.
But I sure wish someone would explain to me exactly what crisis we’re trying to avert.
According to what I keep reading, it’s that without banks, nobody can borrow, and the economy grinds to a halt. Well, let’s think about that. Banks don’t lend their own money; they lend other people’s (their depositors’ and their stockholders’). Just because the banks disappear doesn’t mean the lenders will.
Bill Gross, founder of Pimco wrote in January:
“Skim milk masquerades as cream,” warned Gilbert and Sullivan over a century ago.
…financial conduits with three-letter monikers pretended to be AAA-rated cubes of butter.
What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve chairman Ben Bernanke required a face-to-face refresher course…
…the “shadow banking system” — [wiki] — hidden for years, untouched by regulation, yet free to magically and mystically create and package loans only Wall Street wizards could explain.
He concludes, “What does it mean for your pocketbook? …wealth creation in faraway corners of the globe. Go with it.”
It may not be the 1930s, yet we might uncover similar thieves and fools as light trickles into the “shadow banking system”.
We may discover never-forgotten history.
We see false politics. Our representatives deliver a constructed stump of slogans. Is this a criminal habituation to the prize of deceit to protect a system of donors and privilege?
From the Juneau Empire: McCain inserted into the Alaska legislature to stymie… bit by bit… to shut down all means of inquiring into the reality and the record… How many years to build such wicked teams? How many years we allow it?
We may soon learn we have been far too easy on each other, tipping our hat and moving aside for bullies, suave cons and smelly deals! Hiding from our duty as true citizens, we have let crafty operations into our cities and communities.
Our funds and our government’s funds might be better spent on value out of the shadows. If Wall Street needs liquidity funding for awhile, why not this suggestion found on a comment thread? The Windfall Incompetence Tax.