Restructure, Don't Revive, the Broken System

Check out this sad story in the New York Times: apparently Morgan Stanley has been doing the right thing by taking fewer risks in their trading than their competitors at Goldman Sachs and Citibank. But in the perverse Wall Street system we have allowed to remain in place in this country, where the big financial traders make money for their firms by big gambles, the bankers who are actually being more responsible are being punished for it. Meanwhile there are record bonuses for the traders at Citibank and Goldman.

This is the problem I have with the resuscitation model rather than the restructuring model when it comes to Wall Street. I give the Obama team credit for wanting to regulate these big financial traders more, but they need to go further than that and change the fundamental financial trading system. What is being recreated in front of our very eyes is the exact same system with the exact same problems that led to our financial collapse in the first place. These big financial conglomerates will still have all the same incentives to take huge risks, and because they are so huge, the risk is to not just to their own company, but to our entire economy. And their financial clout will be compounded by the political power of being that big, which will inevitably lead to weaker regulations and captured regulatory agencies.

Oh, and by the way, that whole "we have no choice but to revive the banks, because that will start the credit flowing and create jobs" thing: it's not working either. Unemployment is going up, we're still losing hundreds of thousands of jobs every single month. I know that it takes a while for jobs to start being produced, but this jobs report is much worse than the forecasts predicted, and the Geithner/Summers team has consistently been too optimistic in their guesses.

We need a big, bold change of direction in this economy. The old models aren't working. Let's get some economists in the White House who actually made accurate predictions on the economy, and let's take on the big banks that brought us this mess. These Wall Street guys are back to their old tricks -- risky trades, huge bonuses -- and the rest of us are getting hosed.

It's time for a fundamental change in direction.

Comments

[mbaty]

It seems like a lot of people are saying what you are--just not those with any real control over the process. We can throw in our votes and sign petitions, and those things are all good. But eventually we all have to rethink what the economy is, what it should be, and what it could be, as well as how we place value on things. Essentially the country is in a preliminary state of emergency regarding our currency. I say preliminary because it seems like this is still just the beginning of an economic crisis that will not leave anyone untouched, even if the wall streeters are basically immune right now. If those at the top were to restructure the economy in a way that addresses the imbalance and inequality of the system the system could continue. As it is, we are still heading for the cliff, still expected to run the consumption engine of the economy while being fleeced by every financial institution or corporation we encounter. How can we continue to consume our disposable products with no disposable income? The economy of tomorrow is sustainability, equality, and generosity.

[Kassandra]

I was noticing that. Only I think it's even worse.

[FearlessFreep]

Restructure the system with TNT!

[noneIn2008]

Lets set up a system like the Federal Reserve, where we turn over control of the banks to the banks with the facade of government control. Better yet, lets pass a cap N trade system that turns over the control of energy to Wall Street traders (read the bill).

[sixchair]

That's the next bubble.

[Rule Of Law]

Yep!