Martin Mayer, the great economics popularizer, wrote in his analysis of the S and L debacle - a book that may be worth a revisit - that what dismayed him most about the whole fiasco is the way the protectors, the major law and accounting firms, had deserted ship. So far from protecting the public from the wrongdoing, they had bathed luxuriously in the money river themselves.
Too soon for final verdicts, but my hunch is that the same phenomenon has occurred here, hugely expanded. What happened in simplistic terms is that Wall Street took the home equity of people of dubious credit, leveraged it to a fare thee well with an array of financial derivatives so complex that you need computer programs to tell you whether you have won or lost, and built a house of cards that has finally collapsed.
What that means in macro terms is that the wealthy have succeeded - again - in transferring an enormous amount of wealth from the truly poor to their own pockets. Let's not kid ourselves as to who these people are. Very few people in these firms and service industries can advance without the proper pedigrees. Throughout the 90's and this decade, Wall Street was a magnet to the Ivy League and prestige law and business schools. (Try to get a job there then or now without the right background. They offer top dollar and they get top credentials.) A niece of mine graduated from Princeton in 1998. Every kid in that class wanted to go into investment banking.
Top law firms have siphoned off huge fees for legal opinions that meant absolutely nothing. Top accounting firms, same thing. We have spoken of financial executives. Look hard and you'll find Stanford and Harvard MBA's, JD's, Princeton B.A.'s, etc., etc., etc. They have the computer skills, the acumen, the connections, the arrogance (of course) and the ingrained smugness to erect the phantom pyramid, in contemptuous indifference to the common sense dangers a taxi driver could have pointed out to them. Who needs taxi driver's common sense when you've got a BS from MIT and an MBA from Stanford? Besides, they were getting rich. They have all faded away and the money is gone.
What will protect ultimately them is that they are one of US - well-educated, knowledgable, urbane - people who know that Degas painted pictures of ballerinas and Vivaldi wrote baroque music. Polite and even witty. Many of them earnest, even thoughtful. People like that don't go to jail - they just don't belong there. (I actually had to listen to that argument from an Ivy League embezzler - he did his nine months in the local jail, appalled every minute by the injustice of it all.)
Politics? Don't know, but I would guess leaning towards Obama. Most graduates of elite schools do favor him, per the polls. (Don't kid yourself; Obama is one of US.) Proponents of the ersatz, elitist liberalism that ignores all the real needs of the ordinary people in favor of some hazy, undefined notions of public good - and always with the complacent belief that WE know best.
In the meantime, it's business as usual. Steal from the poor, befriend the rich. There's nothing surer, the rich get richer and the poor have children. But, hey! in the meantime, in between time, ain't we got fun?
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