- bailouts - with public money
- political deference - from Obama and the rest of Washington
- one famous conviction of someone who did terrible damage - Bernie Madoff - but with no address of root causes
- NO TAXATION whatsoever.
One core problem was the fantasy of self-regulation - the fiction that not only were markets self-correcting (re Alan Greenspan's shocked awakening), but that their multiple and especially biggest players were actually better at regulating themselves than any outside party could possibly be. We should remember, as prominent investor Robert Altman reminded us not long ago, the goal of leading investors is not to regulate themselves effectively but to set it up so it's "heads I win, tails you lose."
I'm struck by how time has stood still since I wrote "Bore Me With Some Accounting" six months ago.
In a few hundred words, Dean Baker explains all: "Banks Own the US Government." And you thought after $13.6 trillion of public outlays and guarantees, it would be the other way around.
In this political environment, the poor might get empathy, but Wall Street gets money, and lots of it. Even when the issue is global warming Wall Street has its hand out. The fees on trading carbon permits could run into the hundreds of billions of dollars in coming decades. A simple carbon tax would have been far more efficient, but efficiency is not the most important value when it comes to making Wall Street richer.The way efficiency comes in way down the list of immediate needs is an interesting feature of our capitalist system that I will ponder some other time.
Baker's main point though is that someone in Washington has actually proposed a tax on our wealthy screw-up friends in finance.
I pay 9.3% California income tax and 33% or something federal, and with social security I'm up around 50% of my income gone in taxes, even though I'm not paying it in France and I don't get much non-military for my money - no national health care, no bullet trains, no local good public transit so I can dump my cars, etc. The proposed tax is 0.02% per transaction. Baker calls it a tax on gambling, and it cut a bit into some of the most absurd arbitrage - making money on minute spreads on large volumes.
Baker points out the political opposition De Fazio the sponsor will face. But his equally important point is about knowledge problem.
The bill faces an enormous uphill struggle in Congress. As Durbin said, the banks own the place, and they are not going to just step aside and let Congress impose a tax on such a lucrative business. But, it is important that people know about the DeFazio bill. First, DeFazio deserves a place on the honour roll for standing up to Wall Street.We don't know much, our dumbness makes us passive, and the passivity leads to easy wins for finance and to bad decisions for the economy overall.
Also, it is important for the public to know that there is a relatively low-cost way to make up the shortfall in the highway trust fund. When Congress raises some other tax and/or cuts a useful programme, people should know that there was a better alternative. It just didn't happen because, as we know, the banks own the place.