Adam Levitin | American Capitalism: Profit, But Fairly

American Capitalism: Profit, But Fairly

Adam Davidson wrote up an interesting apologia for Wall Street in the NY Times last week, which I think is ultimately a call for better regulation, rather than bank-hating. I missed the piece originally, but Yves Smith found it and has nothing good to say about it. I think Yves is a little too harsh on Davidson. I’ve got issues with parts of the piece, but on different grounds, namely that it efuses to engage on the real issue. The problem isn’t financial intermediation. That’s a perfectly fine thing that plays a useful role in society.

Instead, the problem is when financial intermediaries do not treat the intermediating parties (meaning consumer and investors) fairly. The history of US financial services is nothing short of a history of scandals involving financial institutions variously ripping off investors and consumers. I’m not just talking about those scandals we remember, like Milken or Madoff or the recent slew or even the second tier ones like the Salad Oil scam or all of 1920s mortgage bonds. The history of US financial services is largely a history of unregulated innovation resulting in abuse and then follow-up regulatory reform. Lather, rinse, wash, repeat.

Davidson argues that the reason to “hate the banks” is that

Wall Street firms enforce the cold rules of capitalism: hostile takeovers, foreclosures, fee increases, defaults. But those rules clearly do not apply to the largest banks themselves.

Check out the rest here…


7 Responses to “Adam Levitin | American Capitalism: Profit, But Fairly”
  1. qwester says:

    A problem can be recognized only in the terms of a perceived solution. Academics such as Levitin and Davidson and flame throwing trolls named Ivent suffer from these intellectual limitations. Ignoring Paulist rants, the true center of the problem maintaining economic stability is the degree to which we ignore the family rather than the corporation as the central pillar of our economic motivations. Whatever is destructive of the family in both the short and the long run will destabilize the economy. The definition of regulation is to make the system regular meaning that estimates of future performance will be as expected and as previously experienced, ergo, regular. The present culture into which we have descended has bred a population having expectations expanded beyond its capacity to deliver, thus providing, even in our elected officials and other investments, disappointment, dismay and collapse. However appealing pre-election promises appear to be, no single martinet president or political party can repair the present disaster in one term. Neither party has a shred of gravitas. One party will put the labor unions in charge and the other will favor the banks to run things, either to our doom. Alas, that’s where the money for lobbying and political advertising is.

  2. Understanding economics helps to go along way with understanding what happened and why. I disagree with this authors subjective assumptions on both historical events and their ramifications in the article. First, we are not a capitalist country; our money is not even free market derived and we are regulated and taxed to death, hence the closure of some 40,000 factories in the last decade. This is called fascism and we are best defined as a fascist oligarchy. see – The Democratic Capitalist Illusion. It is the Central Bank, as Ron Paul often mentions, that is the underlying problem of our socio-economic system. It should be abolished. When you give the monopoly power of lending, interest rates and the money supply in such a controlling manner to a group of the wealthiest individuals in, some say, since we don’t really know who the shareholders really are, the world, do you really expect different results. That much power in the hands of such few is going to really screw things up, as it has. The 1st Great depression was caused by the Central Banks and so is the 2nd Great Depression which is really starting to become more apparent as things continue to unravel around the world. Don’t get fooled by these little up and down movements of the markets. If it weren’t for spending on the military industrial complex in the U.S., the statistics would clearly show a Depression. The facts are that most of Wall Street and the smaller banks are just intermediaries and the largest banks and brokerage firms are in collusion with the Federal Reserve Bank. You can believe what you want, but that doesn’t mean it’s always true.

    • lvent says:

      Monopolization…that is how they did this…whatever they did not own…they bought…the blame belongs squarely on the politicians….the traitors from within…

    • lvent says:

      the largest banks and brokerage firms AKA wall street as well as the fed are all owned by the world Bank …the elite…they control by proxy..they have hijacked the treasury and the white house…this was the biggest financial coup de tat of our wealth in history…I blame the traitor politicians..forget understanding finance…STUDY ROME…!

      • lvent says:

        Study the last great depression…same players..

      • lvent says:

        This is a modern day Hitler plan…same weapons of banker debt financial mass destruction…and a lot of big lies they try to make us believe….


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