In a fascinating parenthesis in our cover story, “Wall Street’s Next Political Storm,” Nicole Gelinas quotes President Obama from 2009 saying the government would continue to “provide the support [to major banks] to clean up their balance sheets.”
Insightfully, she notes the “jarringly wonky language that reminds us, half a decade later, of how the most obscure details of the financial crisis riveted ‘regular people’ at home.”
Gelinas observes that Wall Street issues played a significant role in the elections of both 2008 and 2012, and predicts it will again loom large in the next presidential election of 2016.
She is certainly correct about that, and it is worth amplifying some reasons why financial wonkiness will remain with us for some time to come.
Exhibit A comes from an obscure, “wonky” annual report, weighing in at 246 pages, from the Basel, Switzerland-based Bank for International Settlements (BIS).
For those not in the know about BIS, it is the central bank of central bankers. So the report’s primary audience is people like Fed chair Janet Yellen, ECB president Mario Draghi or Bank of Japan governor Haruhiko Kuroda.
As readers well know, advanced economy central banks have been expanding their balance sheets (there’s that term again) by the trillions of dollars. You might expect that BIS, as part of the fraternity of central bankers, sees such activity as necessary, even if a necessary evil.
But no—the report, which has attracted little attention outside of a few fund managers going to cash—focuses more on the evil than the necessity of easy money.