ThatDamnedPanda
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quote:
ORIGINAL: MmeGigs
I haven't dismissed all of these folks. I agree quite a bit with the folks at the Economic Policy Institute, and they're economists, journalists and analysts. I dismiss a lot of what the Wall Street folks have to say because what I've heard from them sounds like they just want to patch up the holes and go on with things pretty much the way they have for the past 25 years. They don't appear to be too interested in looking at their role in getting us here. I haven't heard them talking about what the financial sector needs to do differently, but I've heard them defending their practices and shooting down suggestions for change. And you know I pay attention - I don't just listen to the stuff that supports my views.
I think that we've been paying too much attention to what Wall Street thinks we should do for way too long.
OK, but that's a separate debate. We're going in circles here.
I'm saying that no matter what anyone thinks of their track record or their motivations, you still need to pay attention to the market and the analysts, because they still do make some very valid points - and that this particular point, that the ongoing banking crisis is a deepening threat to the stability of the economy, is a good one. That they're making a good argument. An argument that I find very persuasive.
And several people, you among them, have ciriticized that argument with blanket dismissals of Wall Street's credibility as a whole. And when i ask people exactly what fault they find with that specific argument, all anyone comes back with is a re-assertion of the arguiment you just made, that Wall Street doesn't have all the answers and we've been listening to them too long. That's not an answer to the question, "What do you find wrong with that specific argument?" Unless what you're saying is that because they don't have all the answers, they don't have any answers, which is what you say you're not saying. But I haven't seen you - or anyone else - say anything else. This just keeps going in circles. Why do you guys think that particular point is wrong?
quote:
ORIGINAL: MmeGigs
I haven't heard anyone from Wall Street acknowledge that this is a problem - that without a stong base of consumers to buy the things that we're producing there simply isn't going to be much wealth created for the people at the top to shuffle around. I'm waiting for these folks to admit that labor and consumers are the same people. When they do that, I think that we'll be on our way to some sustainable long-term solutions.
I've heard a lot of people, for many years, saying pretty much exactly that. The trouble is, their individual recognition of that fact doesn't matter, and in most cases doesn't really affect the way they run their business. The way they run their businesses is determined more by the regulatory environment that defines the way they're allowed to run their businesses. Altruism and forward-thinking is simply not good business in an economy where more predatory, short-term thinking confers an evolutionary advantage upon more aggressive, less responsible businesses. I'm not defending that, I'm just saying it is what it is. Read on...
quote:
ORIGINAL: MmeGigs
You've kind of surprised me here, too. I think that the problem is that we're coming at this from completely different directions. I disagree with you about who/what is the foundation of our economy. You have said that it's the financial sector. I believe it's consumers and the retail sector.
I stand by that. Strong consumer spending and strong retail are far more dependent on a strong, reliable banking system than the other way around. Consumer spending and healthy retail (along with small business creation) may be the engine that drive economic growth, but a strong financial sector is what makes it possible for them to thrive, because that's where the money flows from. If the banks are not working, nothing else can work until they're fixed.
quote:
ORIGINAL: MmeGigs
You're absolutely right that the financial sector is "how businesses are capitalized, how new businesses are funded and existing businesses raise money to create new jobs and develop new products", however, without enough consumers to buy the stuff, those investments won't pay off. I am concerned about the kind of jobs we're going to create. In recent years, our economy has been producing mostly jobs that pay crap and have lousy benefits. The number of working folks getting assistance with food, housing, daycare, and medical costs has been rising. That has had a huge effect on our economy, as a number of economists and analysts predicted it would. I don't see anything coming out of Wall Street that addresses that. That's where I'm coming from.
And you're not going to see anything from Wall Street that addresses that. Why would you? That's not their role. As we agreed, their role is to make as much money as possible. The business community is never going to evolve in the direction you're talking about by itself; that will have to be done by regulation. Businesses are dedicated to making as much money for their investors as possible, and investors are dedicated to making as much money for themselves as possible. Since the supply of money is finite, that means they're all competing with other businesses and other investors to get as large a slice of the pie as possible. It's an intensely cut-throat environment, and no business or trader is going to do anything that would put them at a competitive disadvantage relative to other businesses and traders. You're never going to see the American business community suddenly embrace the philosophical paradigm shift you're hoping for. That's not going to happen.
What businesses do is push as aggressively as they can against whatever regulatory boundaries are in place to limit them. They pretty much have to do that just to survive in an environment where every other business is doing exactly the same thing. If you want the businesses to operate differently, you have to give them a different set of regulatory boundaries within which to operate. As it happens, I agree with you 100% on where our economy needs to go in order to be viable in the longterm, but the market is never going to take us there on its own, no matter how badly we let it beat itself into a pulp. The only way the market is going to take us there is if Congress and the SEC force it to take us there by putting in place laws and regulations that will lead to that result. Letting the economy continue to self-destruct serves no purpose other than to make more middle-class individuals suffer more financial misery than they need to be suffering, and make the hole the economy needs to dig out of that much deeper.
These are two separate problems we're trying to solve - they may look like the same problem, but they're not. They're inextricably entwined in an incestuous cause-and-effect relationship, and you're never going to truly solve one unless you solve the other, but they need to be solved separately or they'll never be solved at all. My position is that solving the longterm problem of the increasing imbalance in our economy is going to be a very long process, taking many years. I'm not willing to let the economy continue to collapse for years while we work that out. I see no reason why it can't be done during an improving economy. Stabilize the banks, get the credit and the money flowing again, get people back to work and spending money and opening small businesses again, and give people a chance to feed their friggin' families and not have to worry about spending their retirement living in cardboard boxes under the freeway overpass. That, we can start doing right now. And while we're doing that, take the time we need to craft legislation and regulatory guidelines that will lead to the longterm economic health you're talking about, because if we try to throw together such a framework under the stress and the urgency of a freefalling economic catatastrophe, whatever we wind up with is likely to be even more of a mess than what we're trying to fix.
Let me ask you, so I can get a better idea of where you're coming from - where do you want to go, and how do you see us getting there? What do you want to see from Wall Street that will lead us to the result you're looking for?
< Message edited by ThatDamnedPanda -- 3/16/2009 10:02:45 AM >
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