But now the originators of the leveraged-buyout business model want to control taxpayer-backed banks, to apply another round of leverage to already crippled banks in order to squeeze out all the profits possible. Although this comes at a cost to duped and already drained taxpayers, regulators, legislators and the American public would be foolish to expect anything else from the private equity crowd. If the FDIC thinks it has a problem now, wait until the next implosion of leveraged banks happens.Absolute continuity with what got us here.
Friday, August 28, 2009
Two Economies
It's not so nice to see that the crash that was driven by finance is now being covered up by a recovery that is limited entirely to . . finance. There's the "two economies" problem nicely explained by Max Fraad Wolff. One of my Capitalist Pals discusses the continuing wave of bank failures around the country, eclipsed by stories about Goldman Sachs's profits. Finance has managed to create multiple tiers even within itself, with the local banks dying along with the job base that top-tier banks have long invested in destroying. A slice of Mr. Gilani:
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4 comments:
Is it possible this two economy thing, which looks entirely plausible, is a sign that we've moved into something that isn't capitalism any more, but something that is parasitic on capitalism? Just as, say, organized crime might be parasitic on a first economy?
yes! either that or the other way around.
the time has come to push the reset button
Is a "reset" the same as a "revolution" that breaks the back of the prevailing order, or is it more like, say, finding a 50 year "of jubilee" that puts things back and sets a limit on personal exploitation of basic assets, or can it be done by regulatory interventions (is incrementalism reform possible for a reset?) or does one reset by building something that competes, successfully with the rapacious, derivative-hedge-insurance-betting-speculating wealth-sucking status quo? Is playing derivatives really "capitalism"? or something more like betting enabled by risk contracts that manipulates markets?
i vote for limits on exploitation starting with understanding how this actually works, which I think we're moving towards in the case of subprime loans and some other things, maybe even healthcare. Jubilee would actually be revolution. Remember ye olde 1970s when Volker was brought to the fed to stop the revolution known as inflation . . . we've been caught in this frantic, delerious countermovement for 30 years. See Greenwald's depressing overview of blue dog Obaman reasons for why we still are (http://www.salon.com/opinion/greenwald/2009/08/27/democrats/index.html) ugh, and also hmmmm
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