Business as Usual: The Roots of the Global Financial Meltdown

Business as Usual: The Roots of the Global Financial Meltdown

Business as Usual: The Roots of the Global Financial Meltdown

Business as Usual: The Roots of the Global Financial Meltdown

Excerpt

No adequate account of the contemporary crisis can be limited to shortterm problems inside the finance industry. Overleveraged investment banks, the spread of proprietary trading, ever more opaque and poorly understood derivatives, and hedge funds operating beyond regulation all played significant roles. So did a culture of gambling and greed. But it is just as important to explain why the finance industry became so central to capitalism in this period and why risks became so large, concentrated in private hands, yet globally linked. The short-term failings of business as usual are also connected to larger-scale transformations.

This is missed by surprisingly many. There is a temptation to think that the crisis was the work of errant individuals, not the product of systematic operations. Ideology and self-interest reinforce this view among many on Wall Street. New York Times business columnist Joe Nocera calls it denial, a refusal to see what is evident, as exemplified by the fund manager Anthony Scaramucci, who, speaking on behalf of “the Wall Street community,” complained that President Obama had been “whacking Wall Street like a piñata.” It was a strange attack on a president who had sponsored billions of dollars in bailouts to rescue Wall Street. But the point is not simply that Mr. Scaramucci represents the distorted view of those who benefited from economic arrangements that transferred massive amounts of money from those who work to those who make financial . . .

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