"I don't want casino type jobs at our big banks. It is not acceptable for big banks to gamble with our money and I would hope our banks would stop their gambling. I have no problem with casinos if you are in Las Vegas and you want to gamble, "stated Simon Johnson, the author of the informative new book 13 Bankers which focuses on the background of the financial crisis, in a talk at Johns Hopkins SAIS on April 26th.
The chairman and CEO of Bertelsmann Foundation Dr. Gunter Thielen, speaking at the Bertelsmann/Financial Times conference on the worldwide financial crisis in Washington recently remarked , "If we continue with casino capitalism, then sooner or later the legitimacy of our entire economic system will come into question on a global level.
And, we all heard Senator Claire McCaskill at the hearings with Goldman Sachs senior executives exclaim, "You are all the house, you're the bookie. [Clients] are booking their bets with you. I don't know why we need to dress it up. It's a bet."
The casino comparison from diverse onlookers on the financial crisis is an apt and correct one. While the government regulators were asleep or looking the other way they were not regulating Wall Street. Simon Johnson feels that the "regulators are now completely captured by the big banks."
It is beyond me that there is not more outrage around the country. After watching the smug and arrogant Goldman executives, one felt like demanding that they be contrite and ashamed of what they had done to our financial system. Yet there they sat, looking bored, not being back in the Big Apple making their bets so they can rake in their bonuses. Can anyone seriously explain how you bet against investments that you are making to your clients? Is there not fraud or at least misrepresentation involved in these transactions?
And, let us not forget that Congress was also asleep at the wheel and did not foresee or try to prevent the financial crisis. While the traders from Goldman played their role as arrogant and aloof from the financial storm, the senators all performed their roles as outraged citizens who yelled before the cameras so the voters could see their populist anger. Where was their outrage while the economy was tanking and people who could not afford homes were given loans as if they were candy?
While Congress and the administrations' answer was to spend boatloads of our money on the stimulus package ,the head of Pew Research Center Andrew Kohut, speaking at the Bertelsmann/FT conference said, "The public feels that the stimulus and TARP did not work".
While Americans continue to be bombarded by the reckless casino attitude and practices that exist on Wall Street and in our largest banks we see the rest of the world is not immune from similar economic and financial problems--most of them man -made.
Greece is trying to keep its head above water and not default on its large debt. Portugal and other European Union nations are also reeling from a large debt and too much public spending.
Having worked at the European Commission for fifteen years and given many talks on the euro in its early years I would point out that the introduction of the single currency was more of a political event than an economic one.
If this was purely an economic problem across Europe we would see a different outcome. However, the EU countries have too much invested in the success of the euro to see it collapse. They have too much political capital involved to let the single currency fail.
Europe and the U.S. are so intertwined with trade and investments that a collapse of the Greek economy (some are calling Greece the Lehman Brothers of Europe) would affect not only the rest of its EU partners, but America as well.
Are countries like banks too big to fail? Are traders at Goldman Sachs really allowed to go long and short on the same trade? Are government regulators who didn't regulate beyond being fired?
As Simon Johnson stated at his talk at Johns Hopkins, "There is no social value for having large banks. And, big banks should be able to fail."
As anyone who has taken Economics 101 knows the laws of capitalism provide winners and losers. If you provide enough campaign money and lobby effectively I guess that negates you from losing in today's America. This has to change. If traders take unacceptable risks and do it from our banks they need to suffer the consequences when their deals go south.
We should break up our largest banks, as being bigger does not provide any guarantee of anything these days except, it appears, immunity from any wrongdoing. We should control the outrageous behavior of casino gamblers posing as bankers and seriously curtail their activities in trading that cause more harm than good.
Big is not better and wrong is wrong. Get some serious financial reform with real teeth that can send people who break the law to jail. Move our casinos from the banks and insurance firms in New York back to Las Vegas where they belong. As Simon Johnson said, "Bets in Vegas don't upset the U.S. financial system".
We may not be able to change the smugness and arrogance of the Goldman traders who testified before Congress but we certainly can pass tougher legislation that could put them in prison if they break the law. Casino capitalism has to end before it is allowed to bring on another financial crisis.
Follow Robert Guttman on Twitter: www.twitter.com/cpfr
James Kwak: '13 Bankers': Who's In Charge, The Banks Or The Government?
Mike Konczal: '13 Bankers,' Financialization and the Real Economy
force investment back to main street.
CDS is investment insurance without ownership nor reserves, a double fraud, thank Phil Gramm.
since the conservatives and GS worked together on this law, it's
racketeering.
What we are seeing here is a hidden Fasc ist state in embryonic form. This country has already been taken over by the International Bankers and while Americans call this self evident truth Conspiracy theory and avoid facing the truth the Feds and their Overlords are impoverishing the world with Fiat currency while buying up control of Gold ,oil and other assets of enduring value.
Wake up and look at the parallels to Germany in the 1930's . those who do not learn from history are doomed to repeat it !
At the same time, the criminal organization Federal Reserve also needs to be shut down (or at least have most of their power taken away). They have provided the sugar fix to the banks with their easy money madness. And they are directly responsible for the ridiculous bubble blowing. The moral hazard of their interest rate policies (i.e. penalizing prudent savers with ZIRP while bailing out the greedy who took on too much debt) is absolute madness.
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Hopefully so. It is not even 'our' economic system, it's 'theirs', i.e. the Capitalists. So one can only hope that this system which creates few winners and many more losers is questioned and ended soon.
Dismantled Wall Street.
Repeal the Federal Reserve.
Recover the ill gotten gains and redistribute them to the American People who paid the taxes that bailed these soon to be convicts out of their back alley crap shoot and let's begin again.
We can do better.
It is time for the people to lead and let the leaders follow. Unions marching on Wall Street is a good start.
Separate the CASINO part and ship it to Vegas to be regulated by the Nevada Gaming Commission!
Split the Big Wall Street Banks into $100 Billion Large Banks! That may be 88 Banks without CONFLICTS OF INTEREST! After all the TOP 6 Banks represent 63% of the US GDP which was $14 Trillion or $8.8 Trillion / $100 Billion (Simon Johnson Target) = 88 Banks!
Just think of the Honest Competition to serve MAIN STREET and the Real Economy!
Did you have any “legal, ethical or reputational” concerns about any of the activities undertaken by Goldman employees that were described during the daylong hearing.
Blankfein said, “I heard nothing today that makes me think anything went wrong.”
In Nov 2009 Blankfein was named CEO of the year and then said, “We participated in things that were clearly wrong and we have reason to regret, and we apologize for them.” referring to Goldman’s role in the financial crisis.
Using simple algebra and logic, we can deduce from these two B1ankfein statements that something back in November not discussed in April 27 Senate hearing was “CLEARLY WRONG!” B1ankfein isn’t telling anyone but they must have been far more unseemly than anything we heard in the hearing – at least by Blankfein’s fuzzy definition of right and wrong.
http://www.businessweek.com/news/2010-04-28/goldman-death-fight-may-explain-lloyd-s-words-jonathan-weil.html
I find this hard to believe considering how much the Euro has risen over the years. When I was in Sweden and Denmark I think the exchange rate of the Kroner was like 8-1 and 12-1 respectively.
RRRRRAAAAAAAAAAAAAAAAAAAAAAAAAWWWWWWWWWRRRRRRRRRRRRRRRRR!!!!!
How's that? Seriously though, it's plainly obvious that Blankfein and Co. have absolutely no remorse over this and if they do, the only reason is because they were caught.
They certainly haven't learned any lessons from this and it will happen again unless some kind of regulations are in place because Wall Street apparently doesn't have the moral fortitude to do it themselves.
These companies are destroying our country's financial credibility and who will want to invest in our country if this continues to be business as usual?