Any of this remind you of Great Britain at the turn of the last century?

Unsustainable growth on paper, oversupply from factories in Asia, advertised demand for unfettered consumption, and boy we've got disaster written all over ourselves. William Greider nailed this story several years ago when few were paying attention. Now look what has come home to roost! -Kevo

I'd like to recommend a vocabulary shift to my fellow liberals: whenever you are tempted to write "taxpayer", write "public" instead.

Compare:

"They even might do us all the favor of keeping taxpayer money...."

"They even might do us all the favor of keeping public money...."

The former plays into right-wing anti-tax rhetoric, whereas the latter emphasizes that the money in the Treasury belongs to American citizens as a group, regardless of how much taxes any individual pays.

That's pretty funny, Wall Street complaining about the evil effects of the trade deficit. They have been its second biggest cheerleaders (behind Big Business) forever. Any attempt by anyone to claim that worker and environmental exploitation, coupled with currency manipulation, is NOT comparitve advantage, is responded to with cries of "Smoot-Hawley!! Burn the Witch!"

publicly traded corporations are not engineered to look out for their long-term interests.

Translation: The rules encourage risk. If we fail, we can file for bankruptcy and walk away with whatever we paid ourselves. As Worldcom and Enron proved, the rules also let us prolong complete failure by merging, diversifying and eliminating competition. What we did wasn't failure - it was the equivalent of feeding the wedding party with two fish and a loaf of bread.

Brock: Agreed, though I tend to think people's eyes glaze over when they hear "public money." Maybe it's time to use it more to give it a precise meaning.

Forget about linking compensation to "performance,'—however one thinks this should be defined—the shareholders (aka, the owners of the business for whom these people ostensibly work) can't even get an accounting of what they receive in compensation.

At any rate, I would have used "collegial" in place of "jovial." It seems clear that these executives comprise a de facto part of our government. Unless we stop according them so much deference, we might as well drop the pretense, and grant them a de jure role.

A Dimon in the rough...

Funny you should mention Dimon.
I was going to give him my smart person of the day award on Wednesday...

NYT: U.S. Seeks Expanded Power in Seizing Firms:

Jamie Dimon, the chief executive of JPMorgan Chase and an outspoken supporter for creating a systemic risk regulator, said it was hard to expand the government’s authority to seize troubled financial companies without also dealing with the regulatory issues. “You can’t take care of your heart and not your lungs,� he said in a telephone interview on Tuesday. “You need someone to look behind the corners and to say something like, ‘this company is too big or too risky.’ �

Mr. Dimon said that giving the government this power would have provided a process for dealing with failing institutions like Lehman Brothers, Bear Stearns, Wachovia and A.I.G.

“You don’t want too big to fail,� he said. “You want a resolution process where the process doesn’t damage the whole system.�

I don’t want to sound like an economic Luddite, demanding a return to the gold standard, but we as a country need to seriously re-evaluate how we view the role of the role of financial services.

Financial services used to be thought of as a means to an end — a way to pay for building expensive items like bridges and skyscrapers and for creating and expanding businesses. But about 30 years ago, financial services started to become an end in themselves. Our economy is now reminiscent of an old (and slightly racist) joke about two Hindus who are stranded on a deserted island who become millionaires by trading cocoanuts back and forth, until a Chinese man washes up and becomes richer than both of them by acting as their middle man.

Wall Street’s principle business has become trading scraps of paper back and forth, raising the price each time and taking service fees off the top of each transaction. On second thought, there isn’t even anything as substantial as a scrap of paper being traded, it’s merely electronic points scored on a computer game.

Trillions of dollars have disappeared in the past few months. But where’s the wreckage? Where’s the rubble? There is none, because the financial assets that vanished like a soap bubble never had any more substance than a soap bubble.

For Wall Street the transactions have become the focus instead of the end result, which is supposed to be enabling someone to actually create something tangible. Emphasizing transactions has created huge amounts of wealth -- on paper. And Wall Streeters have been able to cite those earnings as justification for enormous compensation. But they have become so used to those big paychecks that now they seem to think that they are entitled to them no matter what happens.

Treasury Secretary Geithner is an alumnus of Wall Street and he clearly buys into the Wall Street culture. I'm afraid that all he's going to do is put a bandaid over the financial industry's structural problems and make some meaningless rule changes that have plenty of loopholes so that business as usual can continue.

Unless we reign in Wall Street, break up these financial giants and turn our attention back to producing actual, tangible stuff, in ten years we will be right back where we are now -- facing another round of bailouts to keep the economy from collapsing.

In case any dextronauts are here to say, "What right has to government to dictate to companies ..." Well. Corporations, at least, are legal creations of the government. We don't have to confer that status for free, with no strings attached. Basically most of whatever the government wants to hold as a condition for granting incorporation is it's right. Throw back the argument as: argue for or against requirement X on account of practical outcome.

BTW, check this classic article on that subject, and how the supposed SCOTUS ruling giving corporations the rights of persons was fraudulently recorded anyway:
http://www.hightowerlowdown.org/node/664

Too big too fail was ensured in the US when Citi and Travelers merged illegally in the late nineties and the Clinton Admin and the Congress legalized it afterwards. When two big banks tried that in Canada, the PM told them to take a hike. People had their eyes wide open in the US.

Dextronauts

Love it! "The only trouble is, none of the Wingnuts will know we're talking about them.

Per TPM, a great Atlantic piece on our IMF-level economy by Simon Johnson:

http://www.theatlantic.com/doc/200905/imf-advice

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For those of you who have not read it, I strongly recommend Paul Kennedy's "The Rise and Fall of the Great Powers." He points out that the rise of "financialism" is usually a main component of the "fall."

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As for Geithner's "Wall Street crowd," just remember where his boss got a lot of his campaign money.

The New Yorker had an interesting article a couple of weeks ago about the financial disaster in Iceland and why it happened. It's fascinating because it was like our system in fast-motion: they went from producing products (aluminum and fish) to trading on the financial markets and managed to completely destroy themselves because all of the "wealth" they created only existed on paper and they didn't have anything to fall back on once they started losing at finance.

I can't seem to link to the whole article without being a subscriber, but there's a pretty comprehensive abstract available to everyone.

SteveT is on to one of the key things that all Americans need to understand. The financial component of America IS NOT an industry and CANNOT create real assets or wealth. We need banks for holding and lending money and, I simplify it course, because stocks, bonds and commodity trading all has it's proper function. But we do not need this vast monstrosity that has taken the place of traditional banking.

We cannot become a country that thinks it can create real assets and real wealth with a vastly inflated financial services because they cannot create. We are only inviting exactly what has happen, financial calamity through excessive risk taking and fraud as people game the system for easy money.