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Goldilocks evicts the bears: Wall Street honchos, with support from Congress, are trying to...

Goldilocks evicts the bears: Wall Street honchos, with support from Congress, are trying to convince us the financial system was perfectly sound all along. Brad DeLong warns: We can't afford their delusion.
Comments (4)
  • I don't always agree with Brad but in this instance our views are in alignment.

     

    Amidst imminent reform, the bankers/brokers are lobbying for minimal reform in the interests of preserving lucrative businesses and being able to operate with high financial leverage.

     

    Making CDS trade or clear more transparently and limiting customized swaps will erode profitability and the industry is taking varying tacks on this on, including pushing for clearing trades through ICE which is under supervision of the NY Fed who is seen to be more user friendly.

     

    Systemic risk can be reduced by requiring that leveraged firms have more capital avaialable to cushion sudden, unexpected losses. This will reduce leverage ratios and, more than likely, profitability and returns on equity.

     

    On a different note, S&P must not be aware of all of this financial muscle as they downgraded 18 banks today.

     

    17 Jun 2009, 12:01 PM Reply Like
  • It is ironic that a writer warning about self-delusion is engaging in that same character flaw, himself.

     

    The implicit assumption in what he wrote is that the U.S. financial crime syndicate has SURVIVED the crisis. In fact, NOTHING has been accomplished other than to DELAY an inevitable "day of reckoning" for these companies - most of which are STILL hopelessly insolvent (with BoA and Citigroup being obvious examples).
    17 Jun 2009, 12:06 PM Reply Like
  • You erroneously presume that the financial institutions haven't yet bought enough government influence to get themselves bailed out as often as they need to be. They have.

     

    Mark my words: 5 years from now, unemployment will still be high, many borrowers will still have ruined credit, businesses will still be struggling to grow, most wages will be lower -- but the financial industry will be sitting pretty. No doubt in my mind.

     

    On Jun 17 12:06 PM Jeff Nielson wrote:

     

    > It is ironic that a writer warning about self-delusion is engaging
    > in that same character flaw, himself.
    >
    > The implicit assumption in what he wrote is that the U.S. financial
    > crime syndicate has SURVIVED the crisis. In fact, NOTHING has been
    > accomplished other than to DELAY an inevitable "day of reckoning"
    > for these companies - most of which are STILL hopelessly insolvent
    > (with BoA and Citigroup being obvious examples).
    17 Jun 2009, 12:39 PM Reply Like
  • Assuming that they do not blow their own cover by then...

     

    On Jun 17 12:39 PM D_Virginia wrote:

     

    > You erroneously presume that the financial institutions haven't yet
    17 Jun 2009, 01:34 PM Reply Like
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