The stress tests are finished and the verdicts are in: The Bankers Have Won.
James Kwak and Simon Johnson of Baseline Scenario have a not-to-be-missed post
that lay it all out:
In short, relationships between the government and the large banks have
never been closer, with large amounts of money flowing in one direction, and
complete co-dependency going in both directions. Those relationships are not
entirely friendly, which is not surprising. In any crisis when public resources
are called on to bail out the private sector, not all of the oligarchs will
survive; Bear Stearns and Lehman have already vanished. But the winners which
should include Jamie Dimon of JPMorgan Chase and Lloyd Blankfein of Goldman
will emerge even more powerful and influential than before.
In rejecting "nationalization" (regulatory takeover and conservatorship),
the government has not ensured a private, properly functioning banking system.
Instead, it has muddled into a broken-down, undercapitalized system that is
nominally in private hands, but is able to tap the state for apparently
limitless support. And to date, that support has flowed on one-sided terms,
with the taxpayer accepting downside risk but limited upside potential. No
wonder bank shareholders are comfortable with this outcome.
Read More:
http://tinyurl.com/qpmpq4
http://riverdaughter.wordpress.com/2009/05/08/friday-free-milk-and-a-cow-reprise/
