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January 19, 2010

Comments

Money isn't required for everything, but it sure as hell makes things a lot easier. Financiers produce something: they produce the funds necessary for others to keep producing; the funds necessary to help others realize their dreams.

Unfortunately, like all industries, some products fail. Unfortunately, the bubble which caused this current recession was a perfect storm of product failure and government over- and under-regulation. Credit liquidity makes life a lot easier for bankers, but when they mess up, it's the people who depend on that liquidity who suffer. Thus our current predicament.

Obama promised transparency. He's working on it, but he could have done a lot more a lot sooner. He could have done so much more day one in office! If he really wants transparency, he'll support Ron Paul's H.R. 1207, the Federal Reserve Transparency Act (http://www.govtrack.us/congress/bill.xpd?bill=h111-1207).

Yea, I'm with you. Money is required for nearly everything, and I also hope that HR 1207 passes. I know it has a lot of support, but I'm still skeptical it will pass or even be implemented.

I think that you're right to point out that bankers' incentives aren't always in line with society at large, however that's always going to be the case. Regulation can never keep up with the market. That's why transparency is needed so that the market can value things better.

There is still the issue of medium term groupthink in markets though, and I'm not sure how we can encourage the contrarian behavior that would right the market - but it seems like that's part of the answer.

I'm glad to hear this-- it needs to be said.

It can also be said, however, that the fact that the very notion of financial technology is being regarded with such superstition and skepticism is a sign that something has gone horribly, horribly wrong in its implementation.

And I think you're quite right, that what has gone wrong is lack of transparency. It's as though we'd said to the meat industry, "oh, it's a trade secret whether you use cows that died of massive bacterial infections? Well I'm sure you know what's best!"

I tend to be a realist about things, and am wary of the way that money can react with politics in ways that just don't happen in other industries, but it's definitely time we took a more nuanced set of tools to the task-- neither those who would worship or hang the bankers are right here.

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