Tue Sep 16th, 2008 at 05:18:32 AM EST
The Financial Times has a cautious, hedgy (what else?) editorial up today about the banking crisis. This part caught my eye:
FT.com / Comment & analysis / Editorial comment - Kill or cure for the Wall Street malaise
There will now be renewed calls for more regulation, and understandably so. But it is naive to think that the right regulatory response is obvious. From poor governance to flawed incentives, incompetent risk management to foolish strategies, the failures of the financial system have been so widespread as to render a coherent regulatory riposte impossible. The likely outcome is that tight capital requirements will be forced to serve as a catch-all response to risk. If so, the banking system will look more like that of the 1960s – a low-risk, low-return utility business.
How dull and how somehow useless they manage to make that sound. I'm tempted to quip (but is it a quip?) that, over the last quarter-century, just holding down an average job and earning a living has become a high-risk, low-return utility business. Too bad for bankers if they have to return to a humdrum existence, poor duckies.
One of the most important points made in the Anglo Disease op-ed below is that the high-profit financial sector imposes its criteria on all other forms of activity:
The result is an unrelenting focus on profits and shareholder value. Struggling to meet "return on capital" criteria, many non-financial activities experience yet further reductions in capital allocation, and relative decline.
Another aspect of the focus on higher returns is to be seen in the corporate strategies we've witnessed over the years: mergers and acquisitions, down-sizing, outsourcing, offshoring, layoffs. People with skills, people who've invested time, effort, talent and hope in gaining qualifications and learning to be productive in their jobs, have been rewarded with insecurity, stress, and the proposition that, if they lose their jobs, if their "careers" don't work out, well that is a personal failure, while the plate-balancers at the top who are sucking in a gutload of potentially toxic financial froth are "success stories".
Good for "the economy"? Bullshit. We don't even try to measure the amount of productive capacity, of know-how, of human capital destroyed since the nineteen-eighties on the altar of higher returns to satisfy investors and keep the froth bubbling. Good for society? Widening and more violent divisions, the creation of a ninteenth-century underclass, give the lie to that. Good for the individual human soul?
The loss of a general sense of hopefulness only compensated for by the equal-chance illusion, alienation, isolation: it's a violent world that destroys individuals while lying to them about their supposed capacity to make it to the top, and while depriving them of the warmth of networks and solidarity.
The entire scheme reposes on an ideology built on lies. "The economy" equals GDP growth and financial markets, nothing real. Society: doesn't exist. The individual: rugged, Ayn Randish, maybe lucky, when-the-going-gets-tough-the-tough-get-going, Just Do It, ya know? Oh, and history? History? You mean you want to check out Dow variations over the past month?
This is the astonishing following sentence of the FT editorial:
The ambitious and the avaricious will no doubt seek more exciting hunting grounds with hedge funds and private equity groups.
Oh, there'll still be a casino that will sell itself as being vital to "the economy", and the FT will see nothing to object to in that situation?