And nobody can blame China for bringing down Bretton Woods.

China's accumulation of official reserves are a side-effect of the only stable exchange rate policy it can effectively pursue in the context of free for all dirty floats in foreign exchange markets.

Now, one can argue that they are pegged lower than need be, and that this is neo-mercantalism ... but Paulson and his sort were up to very recently very sternly lecturing recalcitrant low-income nations on the necessity of having "savings" and "attracting foreign direct investment" and all the rest of what Paulson and his sort are now criticizing China for successfully doing.

And of course its imbalanced, but its precisely the imbalance that they were insisting on.

And the hypocrisy of Paulson and others of his sort complaining that Germany is engaging in the very same neo-Hooverist policies that they would propose for the US if they thought that the finance sector could survive the strain ... is mind boggling.

Well, at least it would be mind boggling if we were not accustomed to Paulson and his ilk exhibiting extremes of hypocrisy on a regular basis.

And of course, the question of whether to allow big chunks of the productive sector to collapse in pursuit of fiscal rectitude, or to claw off massive chunks of the product of the productive sector to subsidize an unsustainably large finance sector in something like the standard of living to which they have become accustomed ... is a false dichotomy.

We need to mobilize resources to get the productive sector doing something of long term use, and slowly allow the useful bits of the finance sector to recover off the income that they earn from providing services to the finance sector, keeping the finance sector working while allowing deleveraging to occur.

And if there are people who will quit in a huff if their firm is restricted to paying no more than 10x median income as long as they are eating at the public trough, and status games in the contrast between their pay and the pay received by the President and CEO cut them back to a mere $250K ... well, fine. The finance sector has to downsize, and if the biggest egos leave the building, its unlikely to be a long-term detriment.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.