Goldman Sachs Doing God's Work (2)

In a well-reported recent interview with a UK paper Goldman Sachs chairman Lloyd Blankfein told the reporter his firm was doing "God's work".

Former Fed chairman, Paul Volker, totally sidelined by Geithern/Summers said this to a recent gathering of well-heeled bankers in England:

..."“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence,” said Mr Volcker, who ran the Fed from 1979 to 1987 and is now chairman of President Obama’s Economic Recovery Advisory Board"....

Volcker also said the only useful financial innovation from Wall Street in his memory was the ATM machine. Options, shmoptions? For the birds!

The whole article on his speech is here.

One of several Volcker's ignored recommendations to Obama was to temporarily nationalize all those "too big to fail" Wall Street firms, re-establish confidence, clean out both the balance sheets and those financial "arsonists" [my word] to be replaced by a new crew and then re-privatize them. That would have been a lot cheaper and fairer than what has happened. It was sometimes called the Swedish model named after a similar exercise following a banking crisis there in the early 1990's. Read here for a brief backgrounder.

Geithner famously dismissed that option saying: "The United States is not Sweden". To which I responded in an earlier writing back in April 2009 : "No, US is not Sweden. It is Thailand"!

I reproduce my blog here that has a link to a couple of published articles including one of mine:

SATURDAY, APRIL 25, 2009
US is Not Sweden, of Course. It is Thailand
It gives me no pleasure to compare USA to Thailand, the land of crony capitalism, notorious for not providing a level playing field to entrepreneurs, big, small or starting. Its politicians and business interests are inseparable.

I wrote about that comparison weeks ago published in the Bangkok Post, the country's leading English language paper. (Here.) I didn't expect to be taken seriously. After all, I was no world famous Nobel laureate.

My view is no longer so "weird". Read Columbia's Joseph Stiglitz, Nobel laureate in economics and Simon Johnson, MIT professor's testimony at the US Congress Joint Economic Committee on April 21. (Here.) Enough to make you do a Peter Finch "I am mad as hell and I can't take it anymore" in that classic movie "Network'.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas, at that same hearing, weighed in with his thinly vieled criticism of the Geithner/Summers bailout strategy. Sober reading. Scroll down on that page to get the link to their respective testimonies.