Wednesday, September 16, 2009

Let's thank Wall Street for the good job

"Whose fault is the crisis? The consumer!" (an AIG manager, October 2008)

It's tempting to draw satisfaction from the fall of Wall Street's Masters of the Universe, who enjoyed obscenely disproportionate wealth for so long. Not anymore.  Now that Wall Street got out of the hole (through massive doses of our money) it's better to let the Invisible Hand dictate the next move.
I invite you to ponder the structural predisposition for wickedness of our present financial system. How did it happen? Was it always like that -and we refused to see it? 

This week, while commenting the reaction to Obama's speech in Wall Street, two journalists played the "cynical" card: Obama's proposed regulations -particularly his remarks about derivatives and bonuses- are pretty naive. The president ignores the true nature of high finance. Regulation by the government will only take our business to London or Beijing. According to the journalist, it's the very nature of the market's players to find the "cracks in the system."

What happens when the market's "open field" 1 is coerced by actors "findind cracks" on behalf of a few successful insiders who end up at the top?

Isn't the role of the market to guarantee the freedom -thus the health- of economic activity? 2 At this point Smith's Invisible Hand must vanish. Crack-finding takes us to how things are done: SHOR-TERMISM.3 Let's face it. He who makes the largest profit will end up being the most powerful (appearing as index of "economic growth").

It's rare these days to find a judge like Jed Rakoff, speaking about justice(?) The social disconnection and moral cluelessness of Wall Street CEO's is unvarnished. This is executive Richard Bove:

I'm having a difficult time understanding who was harmed here ... why is this company being put into court over a series of events that benefited the nation 4, its economy, its financial system, the shareholders of Bank of America and the bank itself.
1A term used at times by Nobel of Economy Robert Solow. 2 Which is exactly the -naive- rationale of Eighteenth-Century Capitalism -as it was defended by Adam Smith. 3 Alan Greenspan labeled our obsession with short-term performance "infectious greed." It sounds so blasé now.  4Shouldn't we be grateful that Bank of America/Merryl Lynch is strong again? 

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