The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?Of course we now that unemployment has soared even higher since July and Goldman reported an even larger profit for the next quarter after this article was published.
Many of us have been asking or should be asking the question, "What does this contrast tell us?"
Here are his well stated answers:
First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.A very interesting statement, "what it does is bad for America". Indeed it is. As I see it, what it does so well it does at the expense of America as a whole and its people more specifically.
Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.Wall Street's bad habits - greed - have not only continued but have escalated. So powerful have they become that in my opinion they truly believe "they rule the world". Do they?
Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.Here Mr. Krugman says it all. "Washington has done nothing to protect us from a new crisis..." In fact, one could argue that the crisis has escalated to a new level. I am not sure that we truly even rescured the financial system. What we have done is eliminated competition on Wall Street. Enlarged those already "too big to fail" banks into even bigger "we can never let them fail" banks. We have further aided in monopolizing the industry and any anti-trust regulations that may still be on the books and viable.
We have created more inefficiency that cannot provide any viable level of customer service. Cusomer Service - what's that? History has already proven that the larger and more diverse a company grows the less it can operate efficiently. This certainly would be a good topic for some upcoming Economist.
How has this growth in financialization affected us? Krugman says,
Such growth would be fine if financialization really delivered on its promises — if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls. They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers.Financialization to me is the concerted effort to transfer as much wealth our of the economy and into the coffers of those already in control of too much of our money.
By moving money around amongst themselves - by the push of a button - profits were created overnight yet the person pushing the button recieves huge amounts of salary and bounuses to do so. I certainly hope that the "finger of unproductive profiteering" is heavily insured by Lloyd's of London. Actually, that finger is probably insured by AIG to be certain.
Congress has failed us. They listened not to the people - their constituants - but to those in postions of power with self interest in mind, body and soul amongst whom were Treasury Secretary Paulson, Chairman of the N.Y. Federal Reserve Bank Timothy Geithner and Chairman of The Federal Reserve - a private company whose power exceeds that of our President - Ben Bernanke. They all answer to a higher power and I am not speaking of anyone in our government.
If you really examine the bailouts, you will see that they were never meant to rescue our economy or any of the people of America. The notion that if we let some of these banks fail would destroy the world's economy is pure bunk. There are just too many other banking players here and abroad that would have gladly picked up the slack Especially from Goldman Slacks.
Read Paul Krugman's Full Article...click here
2 COMMENTS:
Protesters Plan Huge Anti-Goldman Rally In Washington, DC
Following Massive Showdown in Chicago…
Hundreds of Taxpayers to Converge on Goldman Sachs DC Headquarters Monday
National Mobilization Continues to Demand End to Multi-Billion Dollar Bonuses at Bailed Out Banks and the Too Big To Fail Doctrine, Calls for Congressional Action Now
http://www.businessinsider.com/protesters-plan-huge-anti-goldman-rally-in-washington-dc-2009-11
The second "Big Lie" after "Too big to fail" is "We looked into the Abyss". The Wall Street bankers (in and out of government) followed the practice of the Ancients--which was to throw a virgin into the volcano. Our brave bankers threw in a whole generation of vigins as yet unborn (male and female American taxpayers.
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