short term profits
By Denis on Sunday 14 February 2010, 13:40 - Permalink
Wall St. helped Greece to mask debt... Regulation is blocked in Congress... and the population want services for free. Where do you start a reform?
Wall St. Helped
Greece to Mask Debt Fueling Europe’s Crisis is a nice article (that will
fuel further the disgust of bankers in general and from Goldman Sachs in
particular). Surely bankers will exonerate themselves once more saying they're
not the ones cheating the E.U. rules, the Greek government is. That's true, and
it's a mistake to blindly believe that governments defend the interests of
their population well... Nonetheless, it's also the
Nuremberg
defense for bankers: "I just follow orders." This is just not good enough,
because they're actively participating. If the order is execute this, that
and the other, such defense might hold. But if the order is find a way
to get round the E.U. rules the country agreed to but do not want to
follow, the banker has to sweat to find a way. It's not like the banker
can pretend he ignores this is going round the law. Surely Americans (hence
Goldman) have an interpretation of law which is very litteral: what is not
explicitly listed as illegal is... legal. Finding loopholes in the U.S. laws is
a fantastically lucrative activity for this very reason. Europe tends to have a
slightly more "principled" approach (much more so in some countries than in
others though).
Meanwhile, in his latest book “Survivre aux Crises,” Jacques Attali Slams
Washington as a Do-Nothing ‘Annex of Wall Street’. When asked Don’t you
think the U.S. stimulus package was a colossal effort at rescuing America and
the global economy? Attali answers: It’s an irresponsible effort. It’s
50 times the Marshall Plan, without any way of financing it. It’s easy to spend
without financing. You just say, “I have problems; my grandchildren will solve
them.” Always the same story (think pension reforms in France, think
global warming in the U.S., think Greek debt): most humans are incapable of
restraining themselves now for a better future.
Joseph Stiglitz's latest opinion in the Financial Times said nothing else when
it started with: In the years before the crisis, there was a race to the
bottom, with countries competing on the “lightness” of regulation. Iceland may
have been the winner of that race, but its citizens were the losers.
Stiglitz goes on with addressing what to do while banks within any
jurisdiction threaten to take their business elsewhere if tough regulations are
imposed (or even if they are asked to pay for a fraction of the costs they have
imposed on others).
In the U.K., elections are coming... Obviously, politics will keep lying to the
population. I like the comment by Philip Stephens in The shared hypocrisy
about tax and spend. The key point though is the electorate still needs to
understand there is no free lunch: Talk of “redistribution” may frighten
the horses, but two-thirds of voters still think government has a
responsibility to reduce inequality. A majority may want to call a halt on tax
and spending, but eight out of 10 would like more money for hospitals and seven
out of 10 for schools. Square that circle. As for tax cuts, less than one in 10
are keen if the price is less cash for vital services. People don't want
to pay but want all the services! When one doesn't pay now but consumes now, it
means debt. One way or another. Until people finally learn their lesson, there
is no real progress to be expected.