Thursday, January 21, 2010

Them's fightin' words!

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President Obama effectively declared war on Wall Street's reckless greed this morning:

This sent the stock market into a tailspin, particularly the share prices of big banks and Goldman Sachs in particularly:

As it has been, Wall Street has been raking in record earnings and fat bonuses by effectively gambling with the money of depositors and taxpayers. When their risky bets went sour after the housing market turned down, the big banks were too big to fail, so taxpayers had to bail them out to the tune of $2.5 trillion. In the wake of that bailout, and after accounting standards were twisted to keep the banking system technically solvent, Wall Street had a banner year in 2009 for which they are now rewarding themselves around $150 billion in bonuses. That this whole Ponzi scheme is one of the most unprecedented crimes in American history is a profound understatement.

Well, President Obama, to his credit, has decided to put his foot down by invoking, rather aptly, what he dubbed the "Volcker Rule". Consequently, the robber barons on Wall Street are bound to chop off the President's foot and tank the stock market thereby harming the effective savings of millions of Americans who have placed blind trust in the most untrustworthy sorts. The President's announcement today was like declaring an end to the largest Ponzi scheme in human history.


Reza said...

Under the plan, do u think BAC will be forced to get rid of Merill and become worthless, JPM to get rid of Bear Sterns, etc

J. Adams said...

Almost all the big banks have been insolvent since 2008 IMO. If Obama's plan is ever achieved before the government forcibly takes over BAC, JPM, etc., any part of these institutions that engage in trade-for-profit (or loss) will be divested into stand-alone investment banks or these parts of the business will be bought by an IB, especially Goldman Sachs which will give up its bank charter in short order.

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