Why do I feel uneasy about statements like the following, appearing in Paulson’s latest recommendations:
Treasury began this current study of regulatory structure after convening a conference on capital markets competitiveness in March 2007. Conference participants, including current and former policymakers and industry leaders, noted that while functioning well, the U.S. regulatory structure is not optimal for promoting a competitive financial services sector leading the world and supporting continued economic innovation at home and abroad. Following this conference, Treasury launched a major effort to collect views on how to improve the financial services regulatory structure.
Foxes in the hen house? And where were the foxes before March 2008? Smiling?
Or try this one:
Financial markets in the United States have developed into world class centers of capital and have led financial innovation.
Paulson gives a nice pat on the back for our “centers of capital” that have “led financial innovation.” Wonder what members of the committee inserted that one? Yes, yes, the industry leaders we now have to rescue. But marvel, please, at all those financial innovations.
And I just cannot get my head around the next one:
Now, however, maturing foreign financial markets and their ability to provide alternate sources of capital and financial innovation in a more efficient and modern regulatory system are pressuring the U.S. financial services industry and its regulatory structure.
The Cause, the Prime Mover for our problems, are “maturing foreign financial markets.” May we have some examples of these “alternate” sources, please? Do we mean SWF’s? How have they contributed to our problems? In case you have not noticed, their wealth is a direct result of our poor trade policies.
And then, there is this one:
Treasury believes it must ensure that the U.S. regulatory structure does not inhibit the continued growth and stability of the U.S. financial services industry and the economy as a whole.”
I certainly cannot comment at this time on the specific proposals. They are wrapped in generalities and glossy overviews, difficult to penetrate. For us chickens, details are everything. Lots of deck chairs on the move. But I can make some observations:
- We cannot rely on financial institutions to carry this economy, no matter how big the bonuses were, are…or will be.
- Right now, the financial industry is in the hen house. They seem to be the ones “patching the leaks.”
- Our manufacturing centers are vanishing; almost everything is being off-shored…from pharmaceuticals to computers, from dental bridges to accounting to electronic passports.
- We are far too dependent on central banks to cover our rising debt.
- Credit cannot substitute for trade.
- Strong labor unions create vibrant middle classes. The Regan Revolution has been a rousing failure. Wages have been stagnant or declining.
- Wealth is being concentrated into the hands of a few.
- At the center of this mess lies the WTO and our trade deals. In not insisting that all of our trading partners respect labor, defending its rights to collectively bargain, we have encouraged companies to go elsewhere where labor has no rights and is dirt cheap.
Yes, at the center of the mess is the WTO and our trade policies. For wealth to be more evenly distributed, labor must be protected, here and abroad. It really is time to look at how trade is being conducted. Credit and financial innovation alone create disaster.