Today is Friday and I want to take a step back from all the numbers, graphs, charts and trading talk and say something about the big picture as it relates to our economy and the role government plays, specifically with regards to laws and regulations as they relate to the securities industry. I am not going to talk about specific laws and regulations because that is not the point of this discussion.
The politicians in Washington are going to have to step up to the plate and get up to speed about our economy in the 21st century. Specifically, the politicians need to address the new world of finance and the creation of new financial instruments that eventually led to the present financial crisis.
As our economy changes, as the economies of the world change, investment bankers, in a free and open society, will create and develop financial instruments to meet the needs of business and commerce. This a good thing. As computers enabled creative thinkers to produce financial products that met a need, new markets grew. Unfortunately, these new markets were a head of the creation of adequate regulation and safe guards. The securitization of assets such as mortgages, manufactured housing, auto loans, credit card debt and whatever else out there that could be bundled and made into a debt instrument, a security, and sold to investors, is a marked change from the Wall Street of the 1960’s.
I am not interested in pointing fingers or establishing blame, both political parties need to educate themselves and address the issues and needs that our economy demands. This is not just about Wall Street and the investment bankers that create and sell the new financial products. This is about the whole country. In every state of the union there are state employee pension funds, teacher and school employee pension funds, police and fire pension funds and insurance companies and mutual funds and foundations that invest in asset-backed securities as well as other debt instruments. This is about all of us, not just the people on Wall Street that create, package and sell the securities. We need to get away from the notion that this is us against them, Democrats against Republicans, Liberals against Conservatives, capitalists against socialists. Our economy is too complex to assign simple labels and think we have made a enlightening statement of fact.
I hate to over use the sports analogies, but since professional sports is such a big piece of our culture, and even our economy, here goes. What would a major league baseball game look like with one umpire behind the plate and none on the bases? Could one official referee an NFL game? What would happen? Could we reasonable expect the rules to be followed and enforced with such inadequate oversight? Wall Street is not a game. These pension funds represent peoples lives. A serious melt down means millions of our fellow citizens are affected. This is not a time to be greedy or foolish. This is the time for the people that are elected to represent us and that take an oath to protect our lives from foreign and domestic enemies wake up to the fact that the enemy in this case may very well be our own ignorance or lack of fortitude to bring about the necessary legislation to ensure the well being of us all as it relates to the securities industry.
It is my opinion, that if steps are not taken to shore up the need for better regulation and oversight, that it will not be an enemy from across the pond that will do this great nation in, but it will do itself in because of its inability to act when the opportunity was at hand. It is now time to take a serious look at the events of the recent past, the financial system is not completely broken, but it certainly needs to be repaired. Stay tuned.
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2 comments:
Hi MT!
My husband thinks that what will do us in is the overextension of the empire, and the growng reliance on mercenaries- kind of like Rome.
I see it more simply- unchecked greed. Since when do people think they are entitled to a house, a car, and vacations just for saying I do? Since when did things like cell phones and hundreds of TV channels become necessities? Since when does the birth of a 20 inch baby require a vehicle the size of a small truck? With a DVD player?!
We all went willingly into the debt spiral- brought on by unrealistic, unsustainable expectations for our standard of living. And the government encouraged it. Yes, we need regulations. But we also need to examine our consumption. We need an end to kamikaze spending. We are hamsters on the wheel- working more to buy more to feel better, then working even harder to pay the debt, and feeling so exhausted we buy even more in the name of convenience. It's nuts. We are addicted to acquistion, and are shocked to find we have no free time.
When self- storages pop-up as places to put our overflow of "stuff", it becomes absurd. I say, let's all choose slower growth, less consumption, and a lees frantic race to the grave. The question is- if you opt for realistic slower growth, which is long-term beneficial, will we collapse under the competitiveness of globalization?
Globalization is only our side if we get cheap goods on the back of overworked people elsewhere. That's the price of our standard of living. It has a cost. It's just now that we ourselves have felt the tap on our shoulder, saying it's time to pay the check.
MT- I have a question- the price of gas has been about 4/gallon overseas for a very long time. What makes us so special as to think we deserve it for less? Wasn't it artificially low based on our status as biggest customer? What happens when places like China and India become competition with us for the fuel?
-Kristine
Your words are very interesting and actually on point except for one truism. The three branches of our government are all too busy playing party politics or indebted to special interests. Their corruptness are so far ingrained that it is almost impossible for them to be able to do anything for the betterment of our Country. They tell us they must be re-elected, you know.
Cliff
CliffNotesOnRealEstate.com
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