America, albeit not all Americans, have benefited from the Dollar as the world reserve currency. The organizational structures and peace that follwed WW2 by definition favored the US. That other nations benefited too, is indisputable yet we benefited most: and many nations suffered under that regime. It may be past time that the post WW2 system can be saved, if that is the case, it is a certainty that it is all the US;s own fault. More and more people and politicians are becoming aware and interested in a solution to the situation. Here is an article in that regard. Suffice to say that military adventurism, and a complete lack of fiscal prudence over a long time brought us here. And lets not blame Keynes, who like Adam Smith and many other thinkers had their theories and writings reduced to some flippant maxim.
The financiers all know, or know of each other. Additionally there is an extreme bias toward capital and away from labor. The Right is never concerned about “moral hazard” when high stakes white collar theft is the issue.
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Read the Article at HuffingtonPost
People seem to operate based upon the rules and incentives that pertain: official and unofficial. The balance between transparency and privacy is altered by rules changes. It seems to me that being humans ourselves we should be able to perceive potential failure points in our systems. But instead of examining empirical evidence, we tend to operate from belief and ideology. That impedes our ability to understand what happens and to remake our model. We set up a system that allows for abuse in secret then act surprised that abuse has occurred. Collapses are actually inevitable in this circumstance, we assume because it doesn’t happen instantaneously that we have a sound system.
So we are usually playing craps but kidding ourselves into believing in some awesome new paradigm. What tended to be eliminated in the financial services industry has been compliance and oversight, and to allow mixing of different non equivalent, competing fiduciary responsibilities in the same entity, and to let accountability dissolve through special accounting practices that are manipulative. Additionally federal guarantees affect behavior by encouragingly gambling style risk.
At this point we should probably move away from rules based regulations that seem prone to legal manipulation and move to principle based regs.
I wonder if people now understand that tax cuts and deregulation are not always good things? How many people still want to control their SSI through private accounts? I wonder how many people on the street bellyaching about lost money voted Republican until now. People cannot routinely make good ad hoc decisions for themselves. But, they can make good abstract decisions about how things should generally go. I hope future President Obama makes use of this to push for a paradigm shift.
There is a reason why we face an 11 trillion dollar deficit, and banking meltdown; it is the prevailing wisdom of the last 30 years put into force without apology by the Republicans: tax cuts, deregulation, privatizing, outsourcing, off-shoring, deficit spending, and belief in a worldview that is obviously, demonstrably false. The economy boomed after the Clinton tax increase and lock in. Note that it was not the increase itself, it was the sufficiency of revenue combined with the unlikely event of further changes either up or down, that allowed for the boom. Revenue needs to be sufficeient and taxes stable.