This System Is Not Worth Saving

As the results of the stress tests leak out (with all the professionalism of high school rumor mongering) and we know that banks are still severely undercapitalized, I harken back to my September 20 article Overheard At The Wall Street Bar & Grill. This is not a system worth saving.

We'd be a lot better off if government had never intervened, if big banks that blew it had been annihilated by their own mistakes, if your tax dollars hadn't been thrown down a bottomless banking pit, if we stopped allowing former Goldman Sachs (GS) bigwigs to run our Treasury. It was Paul Rubin who helped clear away the regulations that would have prevented the subprime meltdown, and Hank Paulson who orchestrated the great giveaway last fall that Team Obama has simply kept in progress. Both Rubin and Paulson were from Goldman, and Tim Geithner learned from them. At least you know who puts the gold in Goldman: you do, via taxes.

Instead of propping up the corrupt system that did fail, we should have let it disappear and created a new one that wouldn't. It would have been cheaper, and only the very tiniest sliver of society would have suffered. Almost all citizens would have been fine as long as their deposits were kept intact, which would have been far cheaper to insure than this increasingly catastrophic bailout.

Comments

[ferguson:]

Perhaps "Robert" Rubin should have been cited rather than "Paul" Rubin. Wasn't it Robert Rubin who was treasury secretary under Clinton and went on to provide sanction for Citigroup as it ventured into behaviour that proved to be irresponsible, perhaps even reckless?

Incidentally, the delicate balance between freedom and responsibility is written right into the preamble to our constitution which cites both "the general welfare" and "the blessings of liberty" as among the most fundamental goals to which the federal government is dedicated.

May 07 10:55 AM

[DrZero:]

It is hard to tell investment banking big wigs (Robert Rubin) from disgraced commedians (Paul Rubin aka PeeWee Herman) at this point, so I can understand the mistake the author made.

Paul's momentary indescretions in a movie theatre are nothing compared to Robert's incredible mishadling of many different things in the economy, ending with Citi a burnt out shell of a a once great bank.

May 07 03:49 PM

[EJW3:]

Good call. Would take out the strangle hold on Congress (taxpayers wallets) at the same time.

May 07 05:36 PM

[Jason Kelly:]

Thanks, guys. You're quite right: I meant ROBERT Rubin, not Paul. I fixed it at my site, but am not sure whether it will flow through to Seeking Alpha.

May 08 08:29 AM