Tuesday, September 15, 2009

The Declining Significance of Change

What we have to show for our misplaced hope in the last presidential election:
Reform of financial practices and regulations [of Wall Street] has not taken place. Federal regulators have been feuding over turf. Big financial houses are still designing and selling risky derivatives .... only a few of the generally unregulated hedge funds have closed. Pay on Wall Street is almost back to normal. (The 30,000 Goldman Sachs employees will each earn an average $700,000 this year; senior executives will reap multi-millions again in salary and bonus.)

Treasury Secretary Tim Geithner, White House economic czar Larry Summers, and others have cautioned that we should not dampen the initiative (some would call them "animal spirits") of financial leaders by limiting their compensation. I have worked over the years with several of the Wall Streeters involved; mainly I see them as greedy predators unable to see beyond themselves.

There is a sense of entitlement among these highly paid Wall Streeters — one that Geithner, at the New York Fed before becoming Treasury Secretary, came to accept as normal. If you asked the Masters, they would tell you that they deserve every penny of their compensation and that the shattered lives and lost businesses, savings, and jobs of ordinary citizens have nothing to do with them.
Looks like the extension of the Bush White House by other means. No matter how much we wanted Dubya to go away, he just keeps coming back in the form of Barack Obama's Bush-lite economic policies. The big fear before the last election was that John McCain was warmed-over Dubya, and yet, are we in a vastly different spot policy-wise than we would have been had Obama lost?

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