On Mar 23, 2009, at 12:43 PM, John Gulick wrote:
> Not that it would have made any difference in policy outcomes,
> but in my cut-rate opinion, the liberal-progressive-left has focused
> entirely too much on executive compensation and bonuses, and even
> (to a much lesser degree) too much on good Sweden model versus
> bad Japan model. I could be wrong but it seems to me there has been
> scant attention paid to radically curbing bank liability-to-asset
> ratios and
> radically curbing speculative trading in derivatives contracts by
> third,
> fourth, fifth, and nth parties. I mean, even publicly owned and
> managed
> banks would be enticed to get into that quicksand again if there is no
> structural change to financial markets. The regulatory reform
> discussion
> instead seems to revolve around DLC duds like transparent pricing of
> securitized debt and monitoring systemic risk and blah blah blah.
> It's weird,
> I'm sounding like a white paper wonk myself.
Liab/ass ratios and derivatives trading are really longer-term issues - it's not easy at all to figure out how to regulate this thing, even in an ideal world. I can cut 'em some slack on that. But when it comes to the political fundamental of exercising state control over an insane and dangerous financial sector, there ain't none of that. Nor is there any thought about how to run a far less debt-dependent U.S. economy. It's not like we can go back to c/a deficits of 7% of GDP and marginal propensities to consume of 105% again.
Doug