Risk-taking is the root of all Wall Street evil. So sayeth the Master of the Universe.
Wall Street is not going to play as dominant a role in the economy as regulations reduce “some of the massive leveraging and the massive risk-taking that had become so common,” President Barack Obama says.
The changes in the role of Wall Street and the huge profits that came from that risk-taking could mean other adjustments as well, Obama said in an interview in this week’s New York Times Magazine.
“That means that more talent, more resources will be going to other sectors of the economy,” he said. “I actually think that’s healthy. We don’t want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design.”
There’s that royal “We” again. Hey, college students, you won’t have the stress of deciding on an occupation any more. “We” will decide that for you, on the basis of what “we” think is healthy(?).
What do “we” think the problem was with Wall Street?
The Obama administration is trying to restore more regulations on the financial sector to avoid some of the risk-taking that helped cause the current economic problems.
“Wall Street will remain a big, important part of our economy, just as it was in the ’70s and the ’80s,” he said. “It just won’t be half of our economy.”
What do “we” see replacing it?
Obama said he expects that government efforts to fix the economy will cause long-term changes.
“What I think will change, what I think was an aberration, was a situation where corporate profits in the financial sector were such a heavy part of our overall profitability over the last decade,” he said.
No, I didn’t see an answer, either, exactly. He seems to be saying that since the feds are heavily involved in the financial sector now, by decreasing its profitability through moderating some of the actions that resulted in it, it will leave the door open to other fields of business to take the profit crown. But I don’t see any mention of government’s role in the meltdown. Fannie Mae, Freddie Mac, the demand that banks finance any home loan no matter the risk, corrupt or lazy regulators played no part? It’s all the risk-takers’ fault? Simplistic, to say the least. It’s like he’s claiming the right to decide whose turn it is to be on top without having any conception of how that is achieved. That’s not his or the government’s job.
Obama said he’s confident that people will regain trust and confidence in the financial system, but he believes it will take time.
“I think it’s important to understand that some of that wealth was illusory in the first place,” he said.
Like 401K balances? Your secure retirement was all in your head, people.
The President clearly isn’t a science fiction fan. In the movie Serenity, a libertarian-themed sci-fi story, a group of regimented-society outcasts shelter a girl who knows a secret the government will kill to keep. The secret? It set a virus loose on a planet that was supposed to moderate human aggression. What it actually did was cause 99.9% of the population to lay down and die, and turned the other 0.1% into violent cannibals. All in the hope of making people “better.”
This President has a similar fixation, to make everything better in some vague, undefined way, with no inkling of the possible consequences of his actions. In this case, he wants to moderate risk-taking. But risk-taking is an essential element to progress and innovation in a free society. Be careful what you wish for, Mr. Obama. You won’t turn people into cannibals, but the economy may just lay down and die.