“You are all the house, you’re the bookie. Clients are booking their bets with you. I don’t know why we need to dress it up. It’s a bet.” This is what Senator Claire McCaskill proclaimed at the hearings with Goldman Sachs’ senior executives. Casino capitalism came to life after the recent financial crisis; investment bankers are able to go short, as well as long, on the same investment – meaning that the bank can bet against their clients’ investments. Isn’t there fraud or at least misinterpretation involved in these transactions?
With tougher legislation and some serious financial reform, people who are guilty could actually be sent to jail. There is no social value in having large banks – and do not tell yourself that they can guarantee anything because they’re big. It’s been proven that even big banks can fail – look at the comparison of Greece and Lehman Brothers, right now. Europe and the United States are so intertwined with trade and investments that a collapse of the Greek economy would affect not only the EU, but the US as well.
If traders take unacceptable risks and do it from our banks they need to suffer the consequences when their deals go south. More laissez-faire, tougher legislation and a drastic financial reform - that’s what our economy needs right now.
It’s clear by now that the financial crisis was man-made, not just some weird coincidental series of events. It’s the constant gambling and the insationable greed of some Wall Street bankers that made the system what it is today; making those tower-high bonuses at any cost. In what world are we living if even ‘guaranteed capital’ funds aren’t credible anymore (look at Iceland’s Kaupthing Bank). And this is a minor aspect of everything that’s wrong, the real problems occur in the (business) world;
The Federal Reserve constantly keeps injecting the American system with fresh cash (which doesn’t exist in the first place). The States have lost so much financial credibility all around the world and foreigners wonder why they’d still invest in the States when there are better alternatives like China. And these practices will only keep repeating themselves if no decent regulations are put in place. We all know by now that Wall Street does not have to moral fortitude to do it themselves.
There hardly are any forms of sustainable investment left in the States, the banks that used to be the icons for the American system are now but mere shades of their former glory. The people who initially had nothing to do with the crisis were the ones who suffered the consequences (evictions, …) and no longer have faith in the American economy, nor the political systems. The American citizens have lost confidence in Washington, because they did not act when it was needed, and because they are still sitting around – not fixing anything.
Simon Verduyn
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