In the April 10 issue of Commonweal, and now up on the homepage, is another article on the economic crisis by Charles R. Morris. Few write as clearly as Morris about the series of events and decisions that have brought us to this pass. Fewer still write as trenchantly. Morris spares no one in his survey of the rubble:
The whining on Wall Street about the “Obama Bear Market” is, of course, grossly unfair. It took years for Wall Streeters to blow up the world, so there was no way that a new team could put it back together in just months.
But after the silky-smooth campaign, the administration’s performance has not been impressive, often seeming both irresolute and fumbling. It’s still early, and the public seems well disposed, but it’s past time to finish filling the key jobs, and to stop getting rolled by the bankers.
It would also be nice to see some conviction around a few central points:
• Almost all the “innovation” of the past decade has been destructive. The derivative inventions that enable irresponsible mortgage brokers in Nevada to destroy banks in Switzerland are very dangerous, and the industry has proved that it can’t be trusted with them.
• The financial sector has to shrink. The merger of commercial and investment banking, which put federally guaranteed deposit money at the disposal of high-rolling wheeler-dealers, was an accident waiting to happen. It has duly happened, and has been worse than anyone thought. It’s time to make banking dull again.
• At this late date, it is no longer excusable for key players like Bernanke and Treasury Secretary Tim Geithner to keep on being surprised. There needs to be a standard playbook for intervening; clear guidelines for who fails and who doesn’t; and a quasi-independent corporate structure to hold and manage the government’s security holdings. Drive-by policymaking by Treasury officials and random congressmen will surely end in tears. The current process (which the administration inherited) seems to be: Pay whatever AIG, or Merrill (or whoever) asks for, and hope against hope that it’s the last. It never is, and we have to do better.
Read the rest here.