Tuesday, April 07, 2009

Bank Centric World -- Arianna Huffington

I think Huffington is really smart. That Cambridge (the real one) educated lady with an accent is not someone with a PhD in economics can easily impress or intimidate with a few jargons. Her latest critique of the Geithner-Summers rescue plan, however, is almost on the mark. Click here for the whole essay on her homepage.

Her thesis boils down to this: Team Obama's manic obsessive "idea fixe" regarding banks' centrality in the economy is fundamentally wrong.

To her, that "cosmology" fogged their view and made them write huge wasteful checks to support the banks come what may.

I believe banks are central to the economy for they channel savings to investments without which the economy would indeed stop growing.

My problem with Obama's cosmology is that their world appears to evolve around the very same senior management people who were central in expanding the bubble, in profiting from the bubble personally while taking their firms to ruin.

The defenders keep saying we need bankers to help us out. To which I say, "yes, we do, but not the same people, mate".

Wall Street has a substantial number of talented professional not responsible for the mess we are in. They are perfectly capable of stepping up to take over the management of their own firms.

Obama has forced the resignation of Rich Wagoner at GM and has correctly ordered the restructuring of GM's irresponsible board of directors. Nothing of this sort has happened on Wall Street. Why? Cosmology has something to do with it for sure. There must be something else at work here. But what? Read my take here: Click here.


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