The Economist reflects on the current President's speech yesterday on Wall Street. They say:
"...He included some helpful words on the responsibility borne by homeowners for taking risks they could not afford.... he also urged banks to bring financial services to those currently outside the financial system, and put the consumer-protection agency first on his list of reforms....that the cost of future failures would fall on shareholders and creditors....it is far from clear that he will force money-market funds, a major source of bank funding, to give up their promise to return their capital to investors intact.
"...He included some helpful words on the responsibility borne by homeowners for taking risks they could not afford.... he also urged banks to bring financial services to those currently outside the financial system, and put the consumer-protection agency first on his list of reforms....that the cost of future failures would fall on shareholders and creditors....it is far from clear that he will force money-market funds, a major source of bank funding, to give up their promise to return their capital to investors intact.
He pledged that if taxpayers ever had to step in again to rescue the system, they would get every cent back, a nonsensical promise. True, as Mr Obama pointed out, taxpayers have earned a 17% return on their “investment” in banks that have since bought the government out. But such figures, which are being disseminated with increasing regularity, ignore the money shelled out on institutions such as AIG, Fannie Mae and Freddie Mac, to say nothing of the myriad financing and bond-purchase programmes put in place to support the banks...."
It has been a year since the true start of the collapse and yes nothing has changed. The same group are in charge and even more so with the loss of the weak players. One must ask what do banks do that are in this mess, what value do they add to society. The do monetize certain assets but they all too often generate systemic risks which lead to financial disasters.
How does one regulate a group of people who will always find a way around what rules you have put in place. They are noted for that, they are the carpenter ants and termites of our society, working in the damp wet underbelly of our economy eating and consuming the very structures upon which we build the society. They serve a function, termites serve a function, as bankers monetize things, termites get rid of old wood and convert it into valuable compost. Yet let too close to the house they often cause a collapse.
Who will watch these termites? Good question, because the Government has consistently failed. The G 20 meeting in Pittsburgh will have as its focus this question, and perhaps that is why the current President chose this time to start a trade war with China, to deflect the issue. Saul Alinsky again?
How does one regulate a group of people who will always find a way around what rules you have put in place. They are noted for that, they are the carpenter ants and termites of our society, working in the damp wet underbelly of our economy eating and consuming the very structures upon which we build the society. They serve a function, termites serve a function, as bankers monetize things, termites get rid of old wood and convert it into valuable compost. Yet let too close to the house they often cause a collapse.
Who will watch these termites? Good question, because the Government has consistently failed. The G 20 meeting in Pittsburgh will have as its focus this question, and perhaps that is why the current President chose this time to start a trade war with China, to deflect the issue. Saul Alinsky again?
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