In the Nov 29 The New Yorker, is an article by John Cassidy: “What good is Wall Street?” Mr. Cassidy interviewed a number of highly placed financial industry insiders and experts, including Vikram Pandit, CEO of Citibank, Fred Goldberg, former IRS commissioner, Ben Friedman, professor of economics at Harvard, and Paul Wooley, founder of the Center For the Study of Market Dysfunctionality at the London School of Economics. These and a dozen others were all asked about the same question: Does the financial industry actually serve any socially useful function. The respondents represented several different constituencies. But these academics, government regulators, and CEOs all reached a broad consensus on three points:
1. About a third of what Wall Street does, (its traditional banking function) is absolutely essential—the world economy would collapse instantly without it.
2. The other two-thirds, (high-stakes proprietary trades in exotic derivatives, etc.) are of no social utility whatsoever.
3. It’s the useless part that poses most of the systemic risk to the world economy—and also makes most of the money.
So follow the money strikes again. It is depressing that the truth of this either seems to be hidden so well or is so obvious it doesn't matter, either way neither dems or republicans seem to be inclined to change the status quo of wall street bankers do they.
ReplyDelete