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One question quiz, one year later

Joseph Stiglitz

A little quiz to brighten your Monday morning. Since we all have the attention span of insects at this point, I'll make it just one question.

Q: It's one year after Wall Street teetered on the brink and just about fell off into the abyss. At the time, it was recognized that there were significant, systemic problems in the banking business that had led to the collapse.

Today Nobel Prize-winning economist Joseph Stiglitz says that the U.S. has failed to fix these underlying problems. "In the U.S. and many other countries, the too-big-to-fail banks have become even bigger," he told Bloomberg. "The problems are worse than they were in 2007 before the crisis." President Obama is making a speech calling for new rules to prevent another meltdown in the economy. Will he prevail, with new regulations and rules that limit the size of banks and the exposure of our economy to another, perhaps worse, catastrophic failure? Select one:

a. Of course. We've learned a lot and many responsible people in the financial sector will put self-interest behind the welfare of our nation. Ha ha ha.

b. It's all a bunch of hooey. Free markets that benefit those in charge of them are the way to go.

c. Leave me alone. I'm too busy reading reports from security analysts on how I'm going to invest my money for the next six minutes.

d. I think they should take all gloomy economists and make them go to Pittsburgh. No, wait! They're doing that already!

e. Badges? We don't want no stinking badges.

f. All of the above.

There are no right answers. Just tell me what you think. Hurry. And make it inspiring, willya? I tend to believe the last thing I read.

20 Comments Add Comment

Upon setting one's self up to be a sewage treatment plant; How does one curtail overflow in the midst of a 500 year rain when storm and sanitary are incorporated into the same disposal line?

If the products dispensed by our financial institutions could be treated accordingly, allownces for clean investments could be diverted one way and polutted investments could be diverted to the appropriate cess pool!

The financial products mix is so corrupted with good and bad that there is no world without end--Amen!

Actually I believe that there will be real, sensible, effective government controls put into place, just like after the Great Depression.

And I also believe that two minutes later the Republicans will start pecking away at the controls until they become completely toothless. Then we'll be right back to the boom-bust cycle, until eventually things oscillate so wildly that everyone gets scared again and there's enough votes to pass sensible regulation.

(Sigh) every generation has to learn the old lessons all over again -- the hard way. It's a shame.

Size isn't the problem, it's the need for separation of duties and capital.

The large entities that are commonly referred to as "investment banks" are actually a combination of businesses including proprietary trading, prime brokerage, retail banking (i.e. taking deposits and making loans) and investment banking (i.e. underwriting offerings, executing placements and assisting on M&A).

Having all of these businesses under one roof is the problem. It's like renting shared space to AA and a bar. You need to put up some pretty thick walls and separate entrances (with a good bouncer too), or you can bet that happy hour is going to get out of hand.

The government's regulatory enforcement has been so swift and meaningful in the past; I am sure that any new regulations will keep the investment bankers in check.

@EAB, The Democrats were just as involved in the dismantling of the regulations and underwriting standards.

There are only a few people worth listening to..Faber, Rogers,Soros,and Stiglitz..

If you read these people, they will tell you we are not out of this thing, merely in the eye of the storm.

How bad is it gonna get,,,well you don't really want to know,,cause your little brain would go in to overload, melt down and dribble out of your ears.

Best do what I do,,,try not to think about it,,,enjoy life while you can...pretend the DOW numbers actually mean something..take your wife/mom/girlfriend out for a nice is so much better that way..

Regulation of completely unfettered free enterprise? That would be socialism. Bring out the "patriot" tea parties. In big (and bigger, and biggest) business we trust.

Time to invest in ammo, because the people in this country have been convinced that government can do no right, even when it comes to a sector of the economy that has proven beyond all doubt that it doesn't care what right is, as long as it pays really, really well.

Denying that we need regulatory review/change begs the question of what the meaning of denying is. So rather than playing it safe let's be sorry again in the future because: 1) you know your wrong/guilty but denying it enough times may capture 50% believers; 2)denial works when you don't know any better; 3)denial will work again because you can always say we never thought we would find ourselves in this position again! Take politics out of it and review your retirement account and income potential for a gut check.

One man's loss is another's gain! That's what makes this country great - you can be rich one day and in the poor house the next, standing in line for your government bailout.

Your key phrase is 'just about fell in the abyss'. Close but no cigar and no structural change because the powers that be only tinker because they do not have the political will to change a system they do not understand. Maybe next time.

g. We'll all go on pretending there's nothing wrong with our elected officials (on both sides) being in the pockets of large corporations (read: banks, drug companies, defense companies, Bing) until they've siphoned off the last of our wealth.

I betting on Pavlov.

Nothing will change. We've demonstrated that we lack the will to change. We pulled the banks' b*ll$ out of the fire, and the only thing that did was convince them that they were indeed too big to let fail. They know we'll do it again, and again, and again. They're like a bunch of farm kids sitting around a stock pond, throwing the bait in, and catching the same old stupid catfish. They figure we're just too feeble and dimwitted to do anything else. They're probably right. Even you Bing, have an admirable, but ditzy, tendency to behave as though we're through this, with happy days just on the horizon.

We're really quite a crappy species despite our Hallmark Card self-image. When the chips are down, count on American business to let us down.

Other than that, I'm feeling pretty optimistic.

The key word is "incentives." YOu do not fix some mysterious SYSTEM. YOu fix INCENTIVES, and then people with right incentives will fix the system. Until someone has the incentive to take risk (with shareholders'/taxpayers' money) and pay themselves the rewards (salaries/bonuses), it will keep happening.

This is the crisis for LABOR economists to solve, who understand INCENTIVES. This is why Stiglitz is so important.

Regulation solves all problems. End of discussion.
Here is the starting point... When it benefits me its OK when it doesn't benefit me we need to regulate it so it does benefit me.

I can already see my stocks soaring and my bank as solvent as I want it.

Come on get real...Regulation is just closing the barn door and feeling good about the new lock as the cow is long gone.

Think like a retired guy - he can't risk playing a game where someone else makes the rules. AKA: retail stock market.

I'm richer now than I was at DOW 14000. You can't do that playing the market. If an investment bank goes bust, who cares - I don't own it.

The point is, don't gamble with money. Take care of what you have. When a recession comes along, you can choose not to participate.

And Jack, is it OK to take your wife AND your girlfriend to lunch at the same time? (;>)

The folks who run Wall Street have proven to be either criminals or morons, and were very, very well paid for it. This will continue.

As they own most of the federal government the Wall Streeters have little to fear fromr regulators.

I have learned that "managed mutual fund" means the chowderheads managed to lose just as much as the amateurs when the markets collapsed.

Investing sucks. Paying off debt as fast as possible is my strategy, plus buying canned food, bottled water and extra ammo.

After Enron and such, we got Sarbanes-Oxley. Notice how that prevented a catastrophic meltdown of the financial system.

The next step must be to make it criminal to be greedy and stupid. Maybe that can keep Wall Street in line.


Actually, "none of the above" is my answer. The Wall Street 500-trillion-gallons tank of rocket fuel has suffered a leak of the main seam, which was subsequently patched with some chewing gum by the Fed. Let's continue the countdown - no need to fix what's has been fixed... Oh, and I am busy selling my equities and bonds and Treasuries to the individuals being born every minute. I plan to use the proceeds to buy some good farmland north in Canada. Why? All these hungry Chinese and India's consumers striving to live the "aMERICAN dREAM" - to eat steaks, drive cars and drink imported clean bottled water. It will have to come from somewhere. Since US will be up to its nostrills in sh$t, PARDON ME, in debt, US dollar following the fate of Zimbabwe dollar and US economic structure in shambles, the GREAT CANADA WILL BECOME THE TOP ECONOMIC PURVEYOR of all that fine food and energy and services to the Nuevo-BRICS.