“Explainer of economics” is the title of David Wessel’s ‘about me’ section of his website, and his latest Wall Street Journal column gives me about as much economic hope as procuring a bigger bathtub for Alan Greenspan
In his latest column “Emerging Lessons from Fighting the Financial Crisis” Wessel had this to say about our current financial crisis
“A few lessons are widely accepted: unfettered poorly supervised finance can be dangerous to economic growth…regulation was less than optimal, if not negligent”
“Government, which did fail to head off the crisis, saved us from an even worse outcome”
And even if we took aside government’s third party control of financial activities, people working in finance have to prepare far more legal documents for any transaction, approach other parties with far more caution, and do far more monitoring of their own employees than any other field you can imagine. So this idea of finance being a world of neglect and carelessness is so out of touch with reality that it seems that the conspiracy theorists in mainstream newspapers can say or claim anything.
You will hear the exact same things from most people who work as financial regulators themselves - I have been reading Frederic Mishkin’s book on financial markets, and the man is on the Board of Governors of the Federal Reserve; yet even he admits that the heavy self-monitoring since the mid 19th century in over the counter derivatives market made it redundant to keep any watchdog back then or even now. Such facts come from even the mouths of government wonks, because it would be too big a lie to assert anything else.
To be clear, the over the counter market carries the most credit risk, since it is not exchange traded, and you only have the word of the stranger on the other side of the phone to honour an agreement. This model of derivatives trading worked flawlessly for more than a century without a single scandal between traders, and even the enthusiastic government wonks don’t see any problem in it that they care to touch it.
All this proves what manner of illiterates journalists are when they speak on finance.
Yeah, what is really boils down to is that having a wrong opinion, which is what financial services are, is not permitted. Ratings agencies are just professional opiners.
The mainstream keeps hoping they can recycle the ideas that have failed countless times in countless places. They hope that some form of socialism yet left untried will work, not realizing that in its most basic form it is unfeasible.