A Business Revolution that has warped both Wall Street and the social fabric


Finally somebody has spoken out abut how modern capitalism has developed a serious flaw ...
source: forbes (read the whole article)

When the Financial Crisis Inquiry Commission issued its reports in January, they raised significant issues about systemic accountability, oversight, governance, justice, ethics and leadership. Those issues are so serious that they raise questions about the future of both capitalism, as envisioned by Adam Smith, and the American Dream.

....

Capitalism is not broken. But the financial industry achieved a 25-year creeping acquisition of it that led to the recent financial crisis, and today financialism controls our economic system. It appears that its leaders have forgotten the underlying premise of capitalism, that the marketplace needs to work reasonably well for all participants. At stake is the American dream and ultimately social cohesiveness. Long-term societal value creation needs to replace the short-term sole stakeholder model.

This is a serious unbalance.  We needs a force to apply to bring it back in balance.  Traditionally that force is wielded by the government.  Unfortunately our government is in the pocket of the very people who are creating the problem.  How can we get our system of capitalism back in balance?

Tags

  1. money
  2. capitalism
  3. balance
  4. government
  5. item 14998

Comments


Seth says
Another example of this is where banks are hoarding money in this stagflation economy, rather than loaning to fuel economic growth ... why? ... well just because they can make more profit and bonuses by keeping it rather than loaning it.  The gulling thing is that a lot of that money was transferred to them from the pockets of us tax payers with the express purpose in mind, or so we were told, to loan to us.  No sane politician would have voted for that bailout had they have know how the bankers would us it.

Mark de LA says
Rush explains a component of bank lending problem:
source: ... Well, I'll tell you what's changed. Interest rates from the Federal Reserve to banks are near zero. They're not near zero for you, at a mortgage or at a credit card, but the interest rate that exists between the Fed and the banks is zero, or pretty much. So the banks can get free money by lending to the government. Now, the government has to borrow from someplace. What the simple explanation is, is that the government is borrowing money from the banks, there's zero interest on that. In exchange for it they're buying Treasury bonds, that's how you borrow or lend to the government, those bonds are a guaranteed 3% return. It's that simple. If you can lend to somebody that's guaranteed to pay you back 3%, as opposed to lending to somebody risky out in the private sector, who may not even be able to collateralize the loan, why would you do it? You got in trouble doing it once on the subprime mortgage business and you were forced to do that if you're a bank. So, if Obama really wants the banks to start lending to people in the private sector, the simple answer is to stop giving banks unlimited amounts of money for essentially free
... i.e. the banks are in cahoots with the Fed & Big Government!


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