| Speaking of dealing with the finance industry with kid gloves, check out Simon Johnson's piece in The Atlantic.
The former chief economist at the IMF and MIT economics professor, Johnson notices the similarities of the collapse of the US economy with other collapses overseen by the IMF in "emerging markets." Basically a financial elite partners with its government to undertake ever increasing financial risks where profits are gobbled by the elites and losses underwritten by the government. According to Johnson, during the first throes of financial trouble, the government always ponies up to the economic oligarchs with tax breaks or government bailouts.
Sound familiar? It should. In essence, the financial industry has been leveraging its power over the US government into increasingly favorable deals, in which it receives oodles of taxpayer money while only delaying or mitigating the roots of the current crisis.
Johnson:
The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.
This may seem like strong medicine. But in fact, while necessary, it is insufficient. The second problem the U.S. faces-the power of the oligarchy-is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.
The financial elite has too much power over the government and is blocking the most effective solutions to the financial crisis, which would put their power and money at risk. To do that, Johnson recommends breaking up the banks into smaller institutions after nationalization, policing them with robust anti-trust legislation, and capping executive pay.
Basically recreate the banking industry into something that's boring -- and safe. And preferably an industry that doesn't hold disproportionate power over our government. |
