Bigger Than Madoff
I’m tempted to stop writing about complex economic trends like "financialization" and just quote Jon Stewart from now on. On last night’s Daily Show, Stewart deftly laid out the problem with letting the financial sector get way out ahead of the productive economy. He boldly suggested that, while it is convenient to point fingers at really bad actors like Bernie Madoff, whose shenanigans were unambiguously illegal, the underlying, systemic problems had to do with wild speculations on the part of Wall Street financiers, and their cheerleaders in the business press, who may never be held accountable. They got away with unethical actions because the financial sector was allowed to take over our nation’s economic policies, thwart all regulations and act as if the productive economy –– and the workers who make things and provide services –– didn’t matter.
As Stewart explains it, there was a fake market and a real market. The market we thought we were investing in was a façade. Both the financiers and their friends at CNBC knew this, but were too busy inflating the bubble to think about the long-term implications. Stewart doesn't let them off the hook: “To pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst.”
The Cramer-Stewart face-off has inspired hundreds of blogs today. Some bloggers see a connection between broader patterns of widespread dishonesty and the Madoff scandal. Reflecting on whether Bernie Madoff is the greatest villian in Wall Street history, Joel Achenbach says:
“No: The greatest villain won't get caught. There may not even be a single greatest villain, but rather many people who devoted their intelligence not to helping investors but simply to helping themselves, at whatever downstream cost to the rest of the country and the rest of the world.”
Yes, it is bigger than Madoff. In fact, it is so big, it requires that we rethink some fundamentals about how our economy has been working, and why today’s income and wealth distribution is as concentrated as it was during the Gilded Age. It also requires that we rebuild our nation’s regulatory framework, aiming for high levels of transparency and accountability, so that this kind of disaster never happens again.
While watching Stewart ‘interview’ Jim Cramer, I almost felt sorry for Cramer. He was trying to be agreeable, even a bit meek, while Stewart kept pounding him. I say ‘almost,’ because, as soon as I saw the video clips in which Cramer explains how to manipulate hedge fund markets, my sympathies shifted to the majority of those who have lost so much.