Politics, open government, and safe streets. And the constant incursion of cycling.

The US Financial Industry

Around September, when this mess was getting some play in the public eye, I used to joke that it wouldn’t be such a bad thing if the financial industry just blew up.  That we could rebuild something much better from the pieces than what we had with the present whole.  I still say that.  I’m not so sure I’m joking all that much anymore.  Two graphs, from a story in the Atlantic:

financial industry compprofit graph

The numbers at the bottom are 10 year terms, starting in 1948.  And yes, that uptick starts around 1980.  From the article, titled The Quiet Coup, by former IMF chief economist Simon Johnson, is summarized:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform.

Break it.  Blow it up.  Let’s just have a plan for putting it back together beforehand, yes?  And one more suggestion: don’t leave that plan to the people who put us here in the first place.  (Of course, that’s the even bigger joke, right there – yes, there’s a problem, but who’s going to fix it?  Not the people in power now.  This is the hand that fed (and clothed, and housed, and . . .).)


Aww, Blue Commonwealth Quits




  1. tx2vadem

    Here we go, this is it! It does seem like regulatory capture since the Obama Admin seems to only want to slightly modify the status quo. If at the end of the day Citigroup is still around, something is not right. When the CEO of BoA is talking about bringing back Glass-Steagall and the Obama Admin is not, something is wrong.

    Something that does not fundamentally overhaul the system will just lead us to the same results again. Sarbanes-Oxley, that many companies bitch about, was only a minor modification to what was already required. But it ended up being the most significant piece of securities regulation in decades just because all we had done previously is roll back. And even with that legislation, it did not address all of the problems identified from Enron and Worldcom.

    So, we are going to do this single fix thing again like with SarbOx. But no one should be surprised when it blows up in our faces again.

    Bleh! This and the panoply of other problems that face not just the US, but the world, make me want to move to Chile and raise Alpacas in the Andes. Or live in a Yurt in Mongolia.

  2. MB

    Great. I’m going to bundle up that Yurt debt with other Yurt debt, sell it to someone who will combine it with Igloo debt and then flip it over to someone who will throw in some teepee debt and slice it into tranches for sale to “green” investors.

    See? There’s already a light at the end of this tunnel!


    Our problem is, in significant part, regulatory. But it’s also cultural. There’s still no real indication (to me, anyway), that we’re moving away from the Bullshit economy in any meaningful way. Until we get voices – where it matters – pushing for that, the best drafted regulatory schemes will be for naught.

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