Friday, October 31, 2008

GammaBoy Coffee Break 2

This column echoes my personal reactions to Obama's comments about deregulation. I had a "you can't be serious" moment, when he started blaming our woes on deregulation. While it no doubt plays well with voters who get to wave their pitchforks at the Wall Street elite, Obama's pitches about deregulation just aren't factually correct.

Which also brings me to comment on YGG's following bit...

"what Wall Street did was flat out morally criminal, and it would have been legally criminal if our Congress and Executive Branch had integrity and/or balls"

When it comes to the Wall Streeters who "profited improperly", I have to say I am tired of that particular bit of campaign rhetoric. There were no doubt Wall Street characters who took home bonuses they probably didn't deserve, but the securities laws are actually pretty good, and misconduct is prosecuted, especially if it is significant. One could argue that Wall Streeters have been paid too much for their work, and I wouldn't disagree with that, but up until the recent Treasury injections, these were purely private companies with private shareholders and private customers. The only people being screwed by gigantic bonuses were shareholders.

On the other hand, there was such enormous fraud by two-bit mortgage brokers, appraisers, home buyers, and other characters it is unbelievable. These people essentially stole from banks, investors, and pension funds, but not a single one of them will likely be prosecuted and they outnumber Wall Street criminals 1000 to 1. The moral corruption you speak of was widespread. Of course, candidates don't get elected by blaming people for their own greed and stupidity, so Wall Street has become the scapegoat now, just as Big Oil was the scapegoat earlier this year.

Everybody games the system, whether it is the millionaire with the tax shelter, the regular guy moving around credit card balances or drawing down all his credit before declaring bankruptcy, or the corporations sending in lobbyists to legislate tax breaks. Bigger government and a more active Fed - a bigger system - just creates the opportunity for more gaming and corruption.

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