Wall Street

The practice of corporate welfare didn't get invented last week. This shit is pretty much business as usual for the better part of a century, subscribed to by politicians, economists and academics from all parts of the political spectrum and enthusiastically supported by voters who believe, rightly or wrongly, that their livelihoods, savings, possessions, or lifestyle depend on it. It may well be a bad thing, with disasterous medium to long term consequences, but don't expect it to change any time soon.

Why Americans are not up in arms and raving mad about this is beyond me: http://www.msnbc.msn.com/id/40681578/ns/business-stocks_and_economy/ Are Americans really that stupid? Why aren't we raising hell?

Wall Street does have legitimate functions -- capital formation is important as is floating bond sales and other functions essential to business development. No debate there. The issues come about when banks, investment houses, hedge funds, and other players begin to take on unnecessary risks as a means to drive up short term profits. Then when the cash flow inevitably turns negative on these investments, these institutions come knocking on Washington asking for a bailout. This, my friends, isn't capitalism, whose central tenet is the notion that institutions which manage risk well and make good decisions succeed while those who don't fail. Here's a case where we're not only subsidizing failure, but implicitly encouraging those same practices by removing moral hazard, which is ESSENTIAL to maintaining market discipline. Indeed Goldman Sachs and other "systemically important" institutions continue to engage in the same practices that lead up to the collapse of the market last y... Read more