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Monday, October 17, 2011

Paul Krugman: Losing Their Immunity

The wizards of whine street:

Losing Their Immunity, by Paul Krugman, Commentary, NY Times: As the Occupy Wall Street movement continues to grow, the response from the movement’s targets has gradually changed: contemptuous dismissal has been replaced by whining. ... The modern lords of finance look at the protesters and ask, Don’t they understand what we’ve done for the U.S. economy? The answer is: yes, many of the protesters do understand..., that’s why they’re protesting. ...

My favorite quote came from an unnamed money manager who declared, “Financial services are one of the last things we do in this country and do it well. Let’s embrace it.” ... But ... the financialization of America wasn’t dictated by the invisible hand of the market. What caused the financial industry to grow much faster than the rest of the economy starting around 1980 was ... deregulation...

Not coincidentally, the era of an ever-growing financial industry was also an era of ever-growing inequality of income and wealth. ... All of this was supposed to be justified by results: the paychecks of the wizards of Wall Street were appropriate, we were told, because of the wonderful things they did. Somehow, however, that wonderfulness failed to trickle down to the rest of the nation — and that was true even before the crisis. ...

Then came the crisis, which proved that all those claims about how modern finance had reduced risk ... were utter nonsense. Government bailouts were all that saved us from a financial meltdown as bad as or worse than the one that caused the Great Depression. ...

Wall Street pay has rebounded even as ordinary workers continue to suffer from high unemployment and falling real wages. Yet it’s harder than ever to see what, if anything, financiers are doing to earn that money. Why, then, does Wall Street expect anyone to take its whining seriously? ...

Wall Street still has plenty of [one thing] thanks to those bailouts...: money. Money talks in American politics, and what the financial industry’s money has been saying lately is that it will punish any politician who dares to criticize that industry’s behavior, no matter how gently — as evidenced by the way Wall Street money has now abandoned President Obama in favor of Mitt Romney. And this explains the industry’s shock over recent events.

You see, until a few weeks ago it seemed as if Wall Street had effectively bribed and bullied our political system into forgetting about that whole drawing lavish paychecks while destroying the world economy thing. Then, all of a sudden, some people insisted on bringing the subject up again.

And their outrage has found resonance with millions of Americans. No wonder Wall Street is whining.

    Posted by on Monday, October 17, 2011 at 12:24 AM in Economics, Financial System, Income Distribution, Politics, Regulation | Permalink  Comments (53)


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