Thursday, May 6, 2010

We Discuss “Does Wall Street Own Washington?” on TVO

This is a full length show with three other guests, with the topic actually being “who was to blame for the crisis, Washington or Wall Street?” I must confess, I didn’t use the obvious line: for the financial service industry’s backers to complain that lack of regulation caused the crisis is like someone who has murdered his parents asking for sympathy for being an orphan.

I was plenty annoyed at one of the fellow guests, Bill Isaac, and hope I was not too sour-faced as a result. Enjoy!

Picture 19

You can view the show here.

Topics: Banking industry, Credit markets, Derivatives, Free markets and their discontents, Media appearances, Politics, Regulations and regulators

Email This Post Email This Post Posted by Yves Smith at 1:23 am

19 Comments » Links to this post

19 Comments:

  • Doc Holiday says:
    May 6, 2010 at 2:10 am

    Wall Street owns Congress and pays great bonuses to insiders!

    RE: “In earlier testimony before the House Committee on Oversight and Government Reform, Paulson defended his response to the economic crisis as an imperfect but necessary rescue that spared the U.S. financial market from total collapse.

    “Many more Americans would be without their homes, their jobs, their businesses, their savings and their way of life,” he said in testimony prepared for that hearing.

    While losses have been staggering, “that suffering would have been far more profound and disturbing” had the government not intervened, Paulson said.”

    ==> Think of all the poor people on wall street that would have been without taxpayer bonuses — we really needed these people in place to continue cashing in on the corruption; the expertise they provide is worth trillions!

  • paper mac says:
    May 6, 2010 at 2:24 am

    Hi Yves,

    Nice to see you on the Agenda, it’s one of the only current affairs shows here with time for a reasonably nuanced discussion of an issue. You didn’t seem sour or annoyed with that Bill guy at all. They usually seem to have one guest like that on every show. In any case, I think this format suits you much more than the 2 minute soundbite interview!

  • Naive_person says:
    May 6, 2010 at 2:31 am

    Sigh. Another Flash video I can’t watch on my iPhone. If you have the time, could you suggest to the show’s producer to post an excerpt on YouTube? It would be free advertising for them.

  • RebelEconomist says:
    May 6, 2010 at 3:04 am

    You forgot Main Street. Not an easy sell, I know, but closest to reality I think – eg house buyers expecting unsustainably soft loan terms and employees accepting implausible pension promises. I fear that, by providing people with an ready culprit, you will mislead them into thinking that if the villains in finance and politics can only be dealt with, everything will be alright. I doubt it; a major root cause is ordinary peoples’ unrealistic idea of their situation.

    I woke up this morning thinking about the UK election, and how, despite a surge of hope and optimism thirteen years ago, in the end the Labour government followed its Conservative predecessor into trouble by turning a blind eye to a dangerous asset price boom, because they enjoyed the popularity fostered by the illusion of prosperity. I will vote for the third party today, although with them promising to replace property tax, more in the hope of changing the political system here to something more deliberative than with any particular enthusiasm about their policies.

  • Gerald Muller says:
    May 6, 2010 at 6:23 am

    Great show! I thought that Yves and Louis Gagnon were by far the most articulate on these subjects.
    I wish there were programs like this one in Europe (at least in France and Germany). Apparently, for TV producers, small european brains cannot keep focused on such an intellectual subject for more than the four minutes of a few good economic commentators.

  • danny says:
    May 6, 2010 at 6:52 am

    Wall street doesnt own Washington. Its more likely to be the CFR or other more protected less publicised groups which indeed control the important centres of power in DC.

  • Mark says:
    May 6, 2010 at 9:31 am

    Here is the link to the video on YouTube. If you would like you can crab the embed code and put the video in your post.

    http://www.youtube.com/watch?v=iZ4ZqgQ_jdY

  • robert says:
    May 6, 2010 at 9:33 am

    As an Ontario resident who hardly ever watches television, this is one hour I try to catch on a semi-regular basis. Great appearance Yves. I liked the way you answered questions succinctly without trailing off like some guests on the program are wont to do. I couldn’t tell you were miffed at Bill Isaac but his assertion the Savings and Loans Crisis was far worse than the current financial debacle had me guffawing. The former chief economist of the Bank of Montreal was also amusing. I wonder if he held his post during the Enron years because this bank was reportedly in it up to its eyeballs.

    Washington and Wall Street are joined at the hip. The blame game now afoot is kabuki theater orchestrated for the benefit of an enraged but generally uninformed public. Now we have to watch Washington “play” good cop – after Wall Street has re-set its trading algorithms to short. So predictable. So pathetic.

  • vv111y says:
    May 6, 2010 at 10:24 am

    Watched it earlier, good stuff Yves.

  • Tim says:
    May 6, 2010 at 10:48 am

    To Robert

    Re Enron: I actually think you are referring to CIBC, the Canadian bank most likely to walk into sharp objects and rated worst for customer service. They only thing I can think of will Bill Issaac is that he is referring to the smaller number of FDIC insured institutions that have had to have been closed this time vs the S&L crisis which to some degree is hardly the point given the growth of securitization.

  • pelfy says:
    May 6, 2010 at 10:54 am

    Ironically, we ratified the Convention Against Corruption (CAC) in 2006. Wonder why we haven’t heard word one about it. Articles 18 and 19 are very intriguing, namby-pamby though they are – you could decimate Congress and the executive by criminalizing Trading in Influence and Abuse of Functions. Now the civilized world will be monitoring us. That ought to be embarrassing as shit.

  • Pwelder says:
    May 6, 2010 at 11:16 am

    Yves – fine presentation.

    You might want to re-think your conviction that incomplete reform now guarantees that there will be nothing later. If the economy is going to be sluggish over the next few years, a 2011-12 crusade against the Wall Street status quo – after the forensics have been more or less done – is one of the most attractive things that the Administration could offer the 2012 electorate.

    They take the relatively easy stuff now, and fight the war later? Makes perfect sense on both politics and substance.

    • readerOfTeaLeaves says:
      May 6, 2010 at 12:21 pm

      I complete agree, provided that national governments continue to have any kind of clout or reign on global megabanks. This may be the moment when the megabanks take over and entities like Congress and Prime Ministers and Presidents move to the ‘Home and Family’ section of the newspaper websites.

      If Greece is any sign of the future, failure to do structural reform at this point will result in social upheaval that will make the 1960s look like quaint.

      I can’t think of any historical precedent where about 1:125 people grew food for an economy in which about 60% of the GNP came from trading and ‘play money’ (i.e., derivatives).

      An economy in which 1:125 people grow food that is consumed by a population of which 75:125 make their livlihoods ‘trading’ (and in which 1.025 of those people cream off 70% of the wealth) doesn’t sound like a very stable setup.

      If my ratios are correct, structural reform is the only ‘rational’ approach at this moment. However, as you point out, Summers, Geithner, and the guys who made this problem in the first place will probably be the least capable of conceptualizing what structural, systemic reform would look like.

  • UnnaturalIntelligence says:
    May 6, 2010 at 1:05 pm

    As much as it is flattering for us Canadians that you continue to grace our television, it is telling that you still receive so little airplay in your home country, where people need to hear your perspective, badly.

    If this trend continues, I foresee a new phase of Canadian-American relations similar to that of the Vietnam era. No draft of course, but austerity measures that will inevitably be put in place to close the deficit may lead to serious and even Greek-style discontent, and it is not hard to imagine many disillusioned Americans taking “refuge” in relatively stable, commodity-rich Canada and continuing to criticise American policy from there.

    Things are just starting to get interesting on the northern border…

  • Raging Debate says:
    May 6, 2010 at 3:04 pm

    Well done Yves. The program needed more of you and less the other two guests. You got into the specifics as well as the macro and netted-out nicely.

  • ECON says:
    May 6, 2010 at 5:54 pm

    Yves, as a resident of Ontario and reader of your site,it was refreshing to see and hear you on TVO. Admirable presentation and hope mainstream media north and south of border deem it to get more of your comments in extended formats.

  • Jim Tarrant says:
    May 6, 2010 at 11:22 pm

    For the record “paper mac”, she was also on the NewsHour (PBS) last week more or less on the same subject except that the NewsHours reaches millions more people than TVO (not that I have anything whatsoever against TVO). Ms. Smith should have more media coverage methinks. But my main point is that, in fact, NPR and PBS do provide “reasonably nuanced discussion”, especially compared to either broadcast media or the usual suspects on cable “news”.

    • paper mac says:
      May 7, 2010 at 12:51 pm

      Hi Jim- I was referring to Canadian television in my comments. Sorry if that was not clear!


    • Subscribe to: Post Comments
    | Subscribe | Blogroll | Topics | Archives | Videos | Contributors | Search |