by Jerome a Paris
Thu Jan 3rd, 2008 at 12:45:07 PM EST
In an editorial paper this morning, the Financial Times suggests the solution to our current woes:
If the new heads of big financial institutions manage to persuade regulators and politicians that they will not make the same housing finance mistakes again and have learnt their lessons, they will probably be allowed to keep going on a similar course to the one they have pursued for several decades.
Hmm, so bankers don't even have to promise not to do it again, they have to convince politicians and regulators that they won't, an even lower bar... Nice to see that financiers are keen to "keep the course" rather than learn (once again) the lessons of the past year about risk taking and the need for regulation.
(And yes, this is about the Bush administration. And in case you wonder what the "Anglo Disease" is, it's a variation on the "Dutch Disease" and you can read more about it here)
Bankers are not the only ones at fault. Easy credit terms led many individuals to speculate on rising home prices in the hope of making money. Although banks provided capital with which to take the bet, borrowers should have known that profits were not guaranteed.
It would, however, be surprising if government or ordinary investors fully turned their backs on Wall Street and the City or pushed for banks’ activities to be substantially curtailed. The rise of financial services in the US and UK economies has helped to ease the move from manufacturing to services and Wall Street banks, despite their extravagances, are eagerly courted by other countries and cities.
Even on Main Street, where many people are feeling – or are about to feel – the painful aftermath of financial exuberance, Wall Street still has its uses. So, at least, its chastened bankers must hope.
Despite the modicum of doubt in the last sentence, the overall tone is shamelessly defiant and unrepentant:
- "We didn't do it" We fed the greed, supported the ideology that promoted it, provided the most blatant and celebrated examples of "wealth creation", but it's not really our fault if people were stupid enough to trust us.
Just like journalists appearing surprised by the existence of dominant narratives that are contradicted by facts when they spend their time peddling that narrative, financiers, who have relentlessly promoted efficiency, return on capital and profit as the ultimate banchmark of everything now act surprised that people were all too willing to go for an apparently easy buck;
- "We'll do it again (just not right away)" You need us more than we need you. We provide jobs, exports, "vibrant" cities and, most importantly, vital services, ie we hold you hostages. So take your hits, and let us do our thing, it's still less painful than if we went away.
This is systemic risk and adverse selection at its most painfully blatant, with a twist of shamelessness to pretend that nothing can be done about it because it's too late this time.
This is the same behavior as the Bush administration - committing illegal and/or reckless acts, defiantly denying they are either, and taunting us to do anything about it. "You know what we did, we know you know, we don't give a shit, so what the fuck will you do about it? Because we'll continue. Oh, and fuck you."
And that's what we're fighting about. Which means that the only solution is to take power forcibly away from them. Exert rights, and actually enforce them. And describe the criminal they are as, well, criminals. And do what you do with criminals: don't let them at large.