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Wall St. needs no sympathy

Obama is attempting to being some sort of order to Wall St. Needless to say the Street doesn't view that favourably - and the GOP is against too much incursions to Wall Street's free-wheeling conduct. One fears that big money and politics will win out.

Paul Krugman, Economic Nobel Prize winner, and op-ed writer for The New York Times, is with Obama all the way. In effect he urges Obama to stick it to 'em.

"Remember the 1987 movie “Wall Street,” in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier.

These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true. Capital was channeled not to job-creating innovators, but into an unsustainable housing bubble; risk was concentrated, not spread; and when the housing bubble burst, the supposedly stable financial system imploded, with the worst global slump since the Great Depression as collateral damage.

So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was."

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