TASE, our miniature stock exchange in Israel, is collapsing. Thanks, Mr Obama. Following his populist approach, the American President continues destroying America's financial structure, only one week after he proposed a new tax on large financial institutions to recoup projected losses from the 2008 bailout.
In Hungarian we would say "Kibujt a szog a zsakbol" (the nail is out of the sack, or something to that effect). We are starting to see the hard populist, anti-capitalist edge of the President. The Chinese must be laughing (but worried for their investments).
2 comments:
I have to disagree. Seperation of the trading activity from the intermediation services of banks, is necessary to prevent banks from using their size to blackmail the goverment into supporting them when they suffer losses. The banks have positioned themselves so that the survivors benefit whichever way the game turns. When the economy is on a rising trend, the banks borrow low from the government to lend to the larger economy. Some of them then go to register highly leveraged trades. When they make money, they reward themselves hugely, when the trades turn sour, these men of rectitude are nowhere to be seen. The government steps in to pick up the pieces. This phenomenon neatly illustrates the principle of socialising the losses and privatising the gains. Paul Volcker, the hard man who whipped inflation in 80s through his chokehold on the money supply is behind this. When the blood on the streets was that of auto workers, steelmakers, construction workers and the petit bourgeois, Wall Street could not applaud Mr Volcker enough. Chairman Volcker had saved Capital from the demon Inflation. They should see the new measures in the same spirit; it is but a mild effort to save capitalism from the capitalists.
Well said.
But the devil is in the details.
Anon.
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