A former chief economist of the International Monetary Fund, wrote in May 2009 about how depressingly similar the US problems are to emerging economies he has worked with. It’s a provocative article: The Quiet Coup (a few excerpts posted here).
“Anything that is too big to fail is too big to exist.”
The Quiet Coup
The problem is oligarchs who overborrow, become too powerful, and gain too much influence:
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“Wall Street ran with these opportunities [lightweight regulation, cheap money, securitization, interest rate swaps, and I would add, high frequency trading]. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.
“The great […]
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