MIT Professor and Former IMF Chief Economist

[equalizer]

[quote=patientrenter]Simon Johnson’s thesis that our government has been captured by the financial services industry is only partially true. For all our complaints, we do live in a mature democracy, with a dispersed government. It’s hard for any one minority interest to hijack the entire government apparatus.

The many, many trillions that our government is putting on the line to maintain high house prices is not just to make some bankers richer, or to put another million in the pockets of a few more Congressmens’ relatives and friends. It’s done to make homeowners happy. They are over 3/4 of all voters. Add all the professionals whose livelihood depends on free money, and you have an unbeatable force that can and does control our government.

Take away the professionals, and the voter block is still powerful, but much weaker. Take away the voters, and you can divert a few hundred billion at most, not 10 trillion (in direct subsidies and indirect guarantees).[/quote]
I’m still reading my copy, but there is disputing that financial services industry has become a huge percentage of the economy. I don’t know if you read the whole article but author does explain how this came to be. I will post later.

Everyone cant keep moving paper around, i.e. become a financial broker, etc. The lesson is that the idolization of salesman was not healthy. And that no on in DC was going to stop the party when everyone was buzzed.

[peterb]

Check out Mike Morgan’s blog on Golden Slacks. Their former executive list that’s in govt positions is rather amazing. Connect the dots.

[peterb]

Check out Mike Morgan’s blog on Golden Slacks. Their former executive list that’s in govt positions is rather amazing. Connect the dots.

[peterb]

Check out Mike Morgan’s blog on Golden Slacks. Their former executive list that’s in govt positions is rather amazing. Connect the dots.

[peterb]

Check out Mike Morgan’s blog on Golden Slacks. Their former executive list that’s in govt positions is rather amazing. Connect the dots.

[peterb]

Check out Mike Morgan’s blog on Golden Slacks. Their former executive list that’s in govt positions is rather amazing. Connect the dots.

[Daniel]

For the uninitiated, it’s quite easy to read Simon Johnson’s piece and jump to the conclusion that there is some financial elite conspiracy to take over the US government. However, it’s not quite like that. I’ve read Simon’s articles for a long time now, and the points he’s hammering home are the following:

– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. Also, many of those people have worked in finance in the past, so they have an inherent bias.

– compensation in the financial services industry has reached stratospheric levels, resulting in a serious mis-allocation of labor. The best and brightest used to go to work for Harvard or MIT, or Boeing or Intel, now they go to Wall Street, because there is so much money to be made. That’s not so good. As someone with a PhD in a math-related field, I can personally attest to that: many of my peers ended up working on Wall Street, and I also considered the prospect quite seriously a few years back.

– finally, since the financial system has grown too large for its own good, it’s time to heavily regulate it. It’s not worth having 20 years of nice growth and fat profits, if it can blow up and take down the entire economy with it periodically. It’s just not worth it.

I think Simon is on to something, although only time will tell whether he’s right or wrong. Most people in charge (Geithner, Bernanke) seem to believe that the financial system needs only to be fixed, rather than completely gutted and replaced. They might turn out to be right in the end. But the truth is, nobody knows for sure today.

[Daniel]

For the uninitiated, it’s quite easy to read Simon Johnson’s piece and jump to the conclusion that there is some financial elite conspiracy to take over the US government. However, it’s not quite like that. I’ve read Simon’s articles for a long time now, and the points he’s hammering home are the following:

– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. Also, many of those people have worked in finance in the past, so they have an inherent bias.

– compensation in the financial services industry has reached stratospheric levels, resulting in a serious mis-allocation of labor. The best and brightest used to go to work for Harvard or MIT, or Boeing or Intel, now they go to Wall Street, because there is so much money to be made. That’s not so good. As someone with a PhD in a math-related field, I can personally attest to that: many of my peers ended up working on Wall Street, and I also considered the prospect quite seriously a few years back.

– finally, since the financial system has grown too large for its own good, it’s time to heavily regulate it. It’s not worth having 20 years of nice growth and fat profits, if it can blow up and take down the entire economy with it periodically. It’s just not worth it.

I think Simon is on to something, although only time will tell whether he’s right or wrong. Most people in charge (Geithner, Bernanke) seem to believe that the financial system needs only to be fixed, rather than completely gutted and replaced. They might turn out to be right in the end. But the truth is, nobody knows for sure today.

[Daniel]

For the uninitiated, it’s quite easy to read Simon Johnson’s piece and jump to the conclusion that there is some financial elite conspiracy to take over the US government. However, it’s not quite like that. I’ve read Simon’s articles for a long time now, and the points he’s hammering home are the following:

– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. Also, many of those people have worked in finance in the past, so they have an inherent bias.

– compensation in the financial services industry has reached stratospheric levels, resulting in a serious mis-allocation of labor. The best and brightest used to go to work for Harvard or MIT, or Boeing or Intel, now they go to Wall Street, because there is so much money to be made. That’s not so good. As someone with a PhD in a math-related field, I can personally attest to that: many of my peers ended up working on Wall Street, and I also considered the prospect quite seriously a few years back.

– finally, since the financial system has grown too large for its own good, it’s time to heavily regulate it. It’s not worth having 20 years of nice growth and fat profits, if it can blow up and take down the entire economy with it periodically. It’s just not worth it.

I think Simon is on to something, although only time will tell whether he’s right or wrong. Most people in charge (Geithner, Bernanke) seem to believe that the financial system needs only to be fixed, rather than completely gutted and replaced. They might turn out to be right in the end. But the truth is, nobody knows for sure today.

[Daniel]

For the uninitiated, it’s quite easy to read Simon Johnson’s piece and jump to the conclusion that there is some financial elite conspiracy to take over the US government. However, it’s not quite like that. I’ve read Simon’s articles for a long time now, and the points he’s hammering home are the following:

– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. Also, many of those people have worked in finance in the past, so they have an inherent bias.

– compensation in the financial services industry has reached stratospheric levels, resulting in a serious mis-allocation of labor. The best and brightest used to go to work for Harvard or MIT, or Boeing or Intel, now they go to Wall Street, because there is so much money to be made. That’s not so good. As someone with a PhD in a math-related field, I can personally attest to that: many of my peers ended up working on Wall Street, and I also considered the prospect quite seriously a few years back.

– finally, since the financial system has grown too large for its own good, it’s time to heavily regulate it. It’s not worth having 20 years of nice growth and fat profits, if it can blow up and take down the entire economy with it periodically. It’s just not worth it.

I think Simon is on to something, although only time will tell whether he’s right or wrong. Most people in charge (Geithner, Bernanke) seem to believe that the financial system needs only to be fixed, rather than completely gutted and replaced. They might turn out to be right in the end. But the truth is, nobody knows for sure today.

[Daniel]

For the uninitiated, it’s quite easy to read Simon Johnson’s piece and jump to the conclusion that there is some financial elite conspiracy to take over the US government. However, it’s not quite like that. I’ve read Simon’s articles for a long time now, and the points he’s hammering home are the following:

– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. Also, many of those people have worked in finance in the past, so they have an inherent bias.

– compensation in the financial services industry has reached stratospheric levels, resulting in a serious mis-allocation of labor. The best and brightest used to go to work for Harvard or MIT, or Boeing or Intel, now they go to Wall Street, because there is so much money to be made. That’s not so good. As someone with a PhD in a math-related field, I can personally attest to that: many of my peers ended up working on Wall Street, and I also considered the prospect quite seriously a few years back.

– finally, since the financial system has grown too large for its own good, it’s time to heavily regulate it. It’s not worth having 20 years of nice growth and fat profits, if it can blow up and take down the entire economy with it periodically. It’s just not worth it.

I think Simon is on to something, although only time will tell whether he’s right or wrong. Most people in charge (Geithner, Bernanke) seem to believe that the financial system needs only to be fixed, rather than completely gutted and replaced. They might turn out to be right in the end. But the truth is, nobody knows for sure today.

[maybe]

[quote=Daniel]
– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. [/quote]

“Sophisticated financial system” is at the heart of the issue– isn’t it?

Any mom and pop landlord could tell you that real estate was overpriced back in 2001, 2002. Our “sophisticated financial system” couldn’t figure the same thing out until 2006, 2007…

I agree wholeheartedly that a “sophisticated financial system” is in our country’s best interest. The question is whether the fools that we are spending trillions on right now meet that requirement…

I’d much rather hand, say BB&T, a couple hundred million dollars and tell them to expand their operations than to keep pumping money into Citibank. This is the second time in my lifetime that the gov’t has bailed them out. Enough is enough…

[maybe]

[quote=Daniel]
– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. [/quote]

“Sophisticated financial system” is at the heart of the issue– isn’t it?

Any mom and pop landlord could tell you that real estate was overpriced back in 2001, 2002. Our “sophisticated financial system” couldn’t figure the same thing out until 2006, 2007…

I agree wholeheartedly that a “sophisticated financial system” is in our country’s best interest. The question is whether the fools that we are spending trillions on right now meet that requirement…

I’d much rather hand, say BB&T, a couple hundred million dollars and tell them to expand their operations than to keep pumping money into Citibank. This is the second time in my lifetime that the gov’t has bailed them out. Enough is enough…

[maybe]

[quote=Daniel]
– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. [/quote]

“Sophisticated financial system” is at the heart of the issue– isn’t it?

Any mom and pop landlord could tell you that real estate was overpriced back in 2001, 2002. Our “sophisticated financial system” couldn’t figure the same thing out until 2006, 2007…

I agree wholeheartedly that a “sophisticated financial system” is in our country’s best interest. The question is whether the fools that we are spending trillions on right now meet that requirement…

I’d much rather hand, say BB&T, a couple hundred million dollars and tell them to expand their operations than to keep pumping money into Citibank. This is the second time in my lifetime that the gov’t has bailed them out. Enough is enough…

[maybe]

[quote=Daniel]
– people in high positions in the government are not corrupt. But they really believe that a sophisticated financial system is good for the country. It’s been true for so long, after all. The anglo-saxon countries, with deregulated financial systems, did so much better over the past 20 years than the stodgy Continental Europe. [/quote]

“Sophisticated financial system” is at the heart of the issue– isn’t it?

Any mom and pop landlord could tell you that real estate was overpriced back in 2001, 2002. Our “sophisticated financial system” couldn’t figure the same thing out until 2006, 2007…

I agree wholeheartedly that a “sophisticated financial system” is in our country’s best interest. The question is whether the fools that we are spending trillions on right now meet that requirement…

I’d much rather hand, say BB&T, a couple hundred million dollars and tell them to expand their operations than to keep pumping money into Citibank. This is the second time in my lifetime that the gov’t has bailed them out. Enough is enough…

[Author]

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