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Friday, May 11, 2012

Wall Street is incapable of policing itself

People keep telling me about Adam Smith's "invisible hand" that's supposed to provide a self-corrective force in the private market, which is why capitalism does not need to be regulated by the government, or only slightly so. But think about this: Stupid risk-taking on Wall Street, in the name of the almighty-dollar, almost sent us spiralling into another global economic depression just a few years ago, and still - still! - bankers are doing stupid, risky things. It only made more headlines yesterday afternoon when JPMorgan announced a $2 billion loss because of this type of stupidity. The question we must ask, though, is if this is the tip of a new iceberg not only for JPMorgan, but for other large financial corporations who have been doing the same thing during the past few years as well? And, no, poor people did not cause the recent financial crash. The people who have most of the power, influence and money did - because they got greedy and reckless. We wouldn't need regulations if the people in control were more responsible and disciplined.

If this type of risky behavior only affected the institutions conducting it, then I'd say carry on and loss your shirt if you want. But because these banks are so large and so inter-related and so important to the overall economy, I'm not willing to do that. That's why we have a Dodd-Frank bill, though only about a third of that regulatory bill has been implemented because of major resistance from the Republican Party, some Democrats and monied-interests on Wall Street. I hope this becomes a major issue in the presidential campaign. I have no problem with capitalism. It is the system that helped boost us into Super Power status. But I have a lot of problems with some of our most powerful capitalists because their risky actions threaten us all.

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