It is a very interesting time to be an observer of the political process in America.
As someone who has participated in, observed and reported on the Wall Street landscape since 1978, you would think that little that happens on Wall Street would surprise me anymore. But I must say that over the past three years, since mid-2007, the velocity of dramatic events surprises even this observer-participant.
Undoubtedly, the fact that I was working my way through NYU during my years on Wall Street informs my thinking and opinions, as has participation in many discussions and meetings as a founder of The Committee for the Fiduciary Standard, a group that advocates for the fiduciary standard for providers of advice to investors. Unlike many who report on what is happening with Wall Street, the economy and investing, I was a broker, then bond trader/underwriter and later, an investment advisor, so that gives me an unusual perspective.
From this perch, a few observations:
? The economic crisis is far from over–and if there are not more measures to help the private sector create–and retain jobs, it seems that we as a nation will not be able to sustain growth for a much longer time than most people believe or at least seem willing to say. Globally, problems in Europe don’t appear likely to dissipate anytime soon.
? The severity of the crisis in America and globally is man-made, or at least made much worse by the actions of a few men (mostly) rather than a markets correcting themselves. Sorry, University of Chicago free-markets economists, I don’t think markets can correct themselves when they have been so severely disrupted by greed and leverage and the lack of regulatory oversight that basically manipulated market forces. There needs to be intelligent regulation and oversight, transparency and actual truth-telling by participants for markets to work effectively.
? When a banks can leverage deposits in such a way as to provide much-magnified capital in order to fund the kinds of operations that, before the end of Glass-Steagall, would have been restricted to non-bank broker/dealers and hedge funds, a mere modicum of common sense would indicate that the leverage applied to these operations would distort results–both upside and downside–as we have seen this past several years, to the detriment of most investors–and all taxpayers. Hello moral hazard–something else that doesn’t appear to be going away, unfortunately.
Goldman Sachs still in the eye of a storm