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I was along for the GameStop ride today, but I've also been at the SEC where we regulated firms like Citadel and RobinHood. The SEC does not intentionally favor rich hedge fund managers over legions of regular working people.
The trouble is much more grave than that.../
The trouble is much more grave than that.../
I learned of this problem while working on the bail-out contingency plans in the event of the next big Wall Street insolvency. No doubt they are reviewing how it works right now.
The lesson I learned was: our 'private' financial system is a giant state-owned enterprise. /
The lesson I learned was: our 'private' financial system is a giant state-owned enterprise. /
Every economic crisis shows the extent of how far the govt has extended into the economy. In 2008, I was just thinking about the financial system. But in 2020, it seems virtually the entirety of the top corporations have a government guarantee via Fed & Congress. /
When the tide goes out, we see that in fact our economy is not at all a 'free market capitalist' economy, but a vast state-owned corporate bureaucracy that should be insolvent but is kept alive by the government's own balance sheet. /
This can't go on forever, yet it can't end either. I think it's a bit like late-stage Soviet Union, which couldn't allow its insolvent SOE's to fail not b/c they were ideologically committed to central planning, but because the transition would be too costly in human terms. /
Kind of seems like the US govt's implicit guarantee allowed our economy to grow into something inefficient, at the same time we also allowed it to grow unresponsive and cruel. Yet we're so committed to it there's no backing down from it. /
In general our leaders won't admit the truth which is that we're fucked it's just a matter of how. Are we going to stop guaranteeing that hedge funds and their bank dealers simply won't be allowed to fail? Or are we going to deal with the pain of letting it blow up?
Heard on a great podcast last night the idea that volatility cannot be 'smoothed' it can only be re-allocated. We cannot remove volatility from our economy through govt guarantees. We can onl re-allocate volatility away from the economy and into society. That's what we're seeing.
I'm just tired of huffing on the liberal hopium that if we just do this thing, that thing, and the other, we can bring American together and restore our greatness.
No, we have a lot of contradictions to work out, and we can't wish them away through huffing copium.
No, we have a lot of contradictions to work out, and we can't wish them away through huffing copium.
