Avoiding future disasters means allocating blame acurately; and most of it lies with bad policy, not with greedy bankers.
Jerome
Thus you need to define the border, and to make damn sure that it cannot be breached.
As best as I can tell, we are nowhere near to even considering effective reform of either component. Nor do I think either reform is highly likely to emerge in the next year. The best hope for an effective solution might be the sort of transformative organizations proposed by Chris Cook, which would only have a chance if strongly backed by a coalition of the Chinese and resource exporting nations. Even given that backing, without campaign finance reform, forcing such bitter medicine on the financial sector, at least in the USA, will be beyond the ability of the political sector. The whole situation will almost certainly get much worse, but this is more likely to produce smoke and dust than to provide any clarity that could lead to resolve. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
The EconomistAvoiding future disasters means allocating blame acurately; and most of it lies with bad policy, not with greedy bankers.But ...
The greedy bankers did subprime lending, securitization, credit default swaps, off-balance-sheet items and contingent liabilities all by themselves, with the intent to do an end-run around the regulators.
So it was not "bad policy" that caused the crisis, though there were quite a few policy-makers who were apologists for deregulation or "industry self-regulation". And if the problem was self-regulation, it was the bankers that failed to self-regulate anyway. Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
It is their natural tendency to use their wealth to skew all aspects of national policy to their favor, along with the actual actions that brought disaster that I am descrying. We won't prevent a repeat or a continuation of the current problems until we take steps to curb the influence. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Trillions in public cash have been handed out to the financial industry. At least some of those trillions have been handed out with no oversight at all.
Which part of 'The Senate and Congress are a wholly owned subdsidiary of Wall St' isn't clear yet?
And don't ask who owns Wall St. That's not a question with a popular answer.
But the collapse and discrediting of Wall Street and the losses of its owners could in fact allow progress to be made on one or two hitherto intractable geopolitical problems.... "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
