Tuesday, March 24, 2009
I'm Pretty Sure Adam Smith Is Rolling Over In His Grave
I am not an economist. I do not even have an amateur's understanding of the subject. Nor has it ever been a subject of great interest to me, even though I work in an offshoot of the financial sector. (Evidently there are quite a few people who know very little about economics but have been running the financial sector for several years now.) I have spent months trying to understand what has happened to the economy of this country and now the entire world. To date, here is what I have learned:
1. When a global problem occurs the natural instinct is to blame the superpower. And in this situation, I believe the blame does fall largely on US shoulders.
2. Deregulation of banks was a really, really bad idea, something that a few people seemed to understand at the time. I knew there was a reason besides his immensely irritating voice that I always cringed whenever Phil Gramm popped up on my TV. But evidently some otherwise intelligent people also went along with the idea. Thank god Bush's plan to privatize social security and hand it over to these same deregulated banks died.
3. Somehow a whole new class of people was created in the last 15 years - the investor class. While some people in the middle class seem to naively believe they are part of this class, because their 401Ks are invested in the market, that's chump change baby. The real scions of Wall Street know that the true investor class is made up of a very few, very wealthy people. This is totally obvious to me. There is no single "class" that could ever be broad enough to encompass both me and Warren Buffet.
4. Evidently no one has any oversight over the Federal Reserve and it's leadership. Why? The SEC is largely ineffectual and yet it continues to exist. Why? And what the hell is the Office of Thrift Supervision?
5. Having people who were totally immersed in the culture that lead to this mess - Hank Paulson, Neel Kashkari, Tim Geithner, to name a few - be responsible for cleaning it up is a really bad idea.
6. Paul Krugman, who I initially liked and probably has some very good ideas, sounds increasingly whiny and petulant that he hasn't been brought into the inner circle, because, after all, he has a Nobel Prize. I don't care how smart he is, no one likes sour grapes and he needs to ratchet it down a notch or two or no one will listen to him.
7. I still like President Obama, but there is an end to my patience. On the economy anyway, I believe he is headed in the wrong direction and is listening to very bad advice. Evidently there was heated debate over Geithner's new plan between Geithner and David Axelrod and Geithner won. President Obama, dance with who brought you. Trust David Axelrod who is, in part, largely responsible for putting you in the White House. Geithner is looking out for his buddies and assuring he has an office and desk to go back to on Wall Street, once he is out of a job in DC.
8. I can't get too worked up about the jack-asses at CNBC, because I have it on very good authority that no one actually watches the network. People working in investments keep it on all day as background noise, so when a client calls, it sounds like they are on the floor of the exchange. However I do think it is a sad statement on journalism in this country that the host of a comedy news show on basic cable is the Edward R. Murrow of the 21st century. Evidently Jon Stewart agrees with me on this.
Finally, I have read a couple of excellent articles in the last few days that have gone a long way towards explaining to me, the economically - challenged little guy, what the hell is going on. I encourage everyone to read both. (And if the two views expressed actually disagree with each other in parts, please don't tell me. I feel pretty good about just getting through both of them.) Read these now:
No Return to Normal - James K. Galbraith
The Big Takeover - Matt Taibbi