DARING OPINION

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The Website of Elie Elhadj

 

Economic Delusion, Political Disaster

By JOHN KENNETH GALBRAITH

The New York Times
March 11, 2001
 
I am not, in my own view or that of others, a plausible political adviser to the Bush administration, but I would like to suggest that it could be on course for a powerful political disaster. Following a period of insane speculation, we are thought now to be facing a recession, possibly even, so far as there is a difference, a depression. To read more...

 
Capitalist Fools

by Joseph E. Stiglitz,

Vanity Fair

January 2009

 
Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion. To read more...


On Wall Street, Bonuses, Not Profits, Were Real
By LOUISE STORY 
December 17, 2008
 
“As a result of the extraordinary growth at Merrill during my tenure as C.E.O., the board saw fit to increase my compensation each year.” E. Stanley O’Neal, the former chief executive of Merrill Lynch, March 200. To read more...


Excessive pay fuels City gambling, says Mervyn King
Gary Duncan
February 27, 2009

The Governor of the Bank of England has attacked the “astronomic” pay enjoyed by top bankers for creating a culture of reckless gambling in the City... To read more...


England's Central Banker on 'Too Big to Fail'
October 23, 2009
 
As the U.S. political class blames banker pay for the panic (see above), we'd like to salute Bank of England Governor Mervyn King for speaking a larger truth. Mr. King gave a speech in Edinburgh Tuesday in which he said, in effect, that if a bank is too big to fail, it's just too big. This prompted British Prime Minister Gordon Brown to shoot back that breaking up the largest financial institutions wasn't the answer, adding the now obligatory call for global regulation of banker pay. To read more...


Volcker Urges Dividing Investment, Commercial Banks
By Matthew Benjamin and Christine Harper
March 6, 2009

Commercial banks should be separated from investment banks in order to avoid another crisis like the U.S. is experiencing, according to former Federal Reserve Chairman Paul Volcker. To read more...


On financial reform, listen to Paul Volcker
October 23, 2009

Last week, Mervyn King, Britain's equivalent of Federal Reserve chairman, delivered a scathing speech calling for radical reform of the British financial system. Among his recommendations: break up the "too big to fail" banks and separate risk-taking investment banks from meat-and-potatoes commercial banking. To read more...

 

Capitalism Needs a Revived Glass-Steagall

 
Reed Apologizes for Glass-Steagall Repeal, Building Citigroup
By Bob Ivry
Bloomberg
November 6, 2009

Nov. 6 (Bloomberg) -- John S. Reed, who helped engineer the merger that created Citigroup Inc., apologized for his role in building a company that has taken $45 billion in direct U.S. aid and said banks that big should be divided into separate parts. “I’m sorry,” Reed, 70, said in an interview yesterday. “These are people I love and care about. You could imagine emotionally it’s not easy to see what’s happened.” To read more...
 
Paulson's Calls to Goldman Tested Ethics
By Gretchen Morgenson and Don Van Natta Jr.
August 8, 2009


Before he became President George W. Bush’s Treasury secretary in 2006, Henry M. Paulson Jr. agreed to hold himself to a higher ethical standard than his predecessors. He not only sold all his holdings in Goldman Sachs, the investment bank he had run, but also specifically said that he would avoid any substantive interaction with Goldman executives for his entire term unless he first obtained an ethics waiver from the government.
But today, seven months after Mr. Paulson left office, questions are still being asked about his part in decisions last fall to prop up the teetering financial system with tens of billions of taxpayer dollars, including aid that directly benefited his former firm. Testifying on Capitol Hill last month, he was grilled about his relationship with Goldman. To read more...
 

Too Big to Succeed
By Philip Bowring
OP-Ed Contributor
November 10, 2009

HONG KONG — This week is the 10th anniversary of the signing by President Clinton of legislation abolishing the Glass-Steagall act, which, since 1933, had kept a wall between commercial banking and investment banking and insurance. That Depression-era law stemmed from the role that speculative investment banking had played in the failure of many commercial banks, which in turn wrought havoc on the U.S. economy.
 
Upstairs, Downstairs
By Graydon Carter 
January 2010

Banking interests have been the beneficiaries of that $17.5 trillion in guarantees, loans, and bailouts, and what have they to show for it? At top-tier firms such as Goldman Sachs and J. P. Morgan Chase, the aid has meant record profits—which means record bonuses. Those two outfits, along with Morgan Stanley, all of which received funds from the Troubled Asset Relief Program, will reportedly dole out an unprecedented $29.7 billion in bonuses for 2009, almost half of that by Goldman Sachs alone, meaning it will enrich its 31,700 employees by an average of $415,000 each. To read more...

 
Fight On, Goldman Sachs!
The New York Times

When the Goldman Sachs chief executive made that tone-deaf remark to an interviewer in November, he became the butt of a million insults, the ultimate symbol of Wall Street’s abdication of responsibility for its sleazy role in the Great Crash of ’08. But now we’ve learned that Blankfein was actually, if inadvertently, on the side of the angels. It’s his myopic, unrepentant truculence that left Goldman exposed to a Securities and Exchange Commission accusation of fraud that will be litigated in public rather than bought off in private. And it’s that S.E.C. legal action that has, in a single week, radically transformed the politics and prospects for financial reform in America. To Read more...
 

The Good Banker

By

Published: May 30, 2011

 
“To me, banks exist for people to keep their liquid income, and also to finance trade and commerce.” Yet the six largest holding companies, which made a combined $75 billion last year, had $56 billion in trading revenues. “If you assume, as I do, that trading revenues go straight to the bottom line, that means that trading, not lending, is how they make most of their money,” he said.
To read more...


Time for us to challenge the idols of high finance
November 1, 2011
 

Routine banking business should be clearly separated operationally from speculative transactions. The rolling-up of individual and small-scale savings into high-risk and high-return adventures in the virtual economy is one of the more obvious danger areas in the light of recent years. Early Government action in this area is needed.
A second plea is for the recapitalization of banks with public money to be accompanied by obligations on the banks to help re-invigorate the real economy.
But the third suggestion is probably the most far-reaching... A 'Tobin Tax'... a comparatively small rate of tax (0.05%) being levied on share, bond, and currency transactions and their derivatives, with the resulting funds being designated for investment and development in the 'real' economy, domestically and internationally. The modest rate of taxation conceals the high levels of return that could be expected (some $410bn globally on one estimate).  To read more...