13 Bankers

Tuesday, August 10th, 2010 | Uncategorized

i have been travelling outside the US for the past seven weeks. although the challenges in Africa, Asia, and Europe are by no means small, its feels as if the mood in the US particularly… gloomy. Oil spill. Dollar spill (mega bank bailout followed by enormous mega bank profits). Deficit spill (money printing until the global community one day will loose its trust in $). Spill of negativity (absence of real dialogue in the political process)… you name it. But the biggest issue probably is that most of these issues are only discussed on a surface not a root level.

A notable exception to this rule is the recently published book: 13 Bankers, The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson and James Kwak.

here are a few key excerpts:

Six Megabanks (Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley) together control assets amounting to more than 60% of the countries GDP, continue to hold the global economy hostage with their excessive risk taking toxic business practices.

Hedge funds: in 2007, five fund managers earned at least $1billion each for themselves, led by John Paulson, who made 3.7 billion successfully betting against the housing market and the mortage backed securities built on top of it.

The financial sector was getting bigger between 1980 and 2000 and the financial sector profits grew faster: from an average of 13% of all domestic corporate profits to an average of 30 % from 1998-07 (85)

The three main mechanisms that Wall Street used to influence Washington:
–traditional capital: money: campaign contributions and lobbying
–human capital: revolving door
–cultural capital: “what is good for Wallstreet is good for America”

Three steps in responding to a financial crisis: ending the panic, preventing economic activity from collapsing, laying the groundwork for economic sustainable recovery. The US did well on no one and two, but not on no three.

Summing up: “the megabanks used used political power to obtain their license to gamble with other peoples money; taking that license away requires confronting that power head-on. It requires a decision that the economic and political power of the new financial oligarchy is dangerous both to economic prosperity and to the democracy that is supposed to ensure that government policies serve the greater good of society.” (p. 221)

Its that lack of common will of confronting that political power that drags not only the US down, but also all the rest of us. 13 Bankers is essential reading!

1 Comment to 13 Bankers

Simon
August 15, 2010

Hi to all,

Ever since the financial panic started and grew into a global financial crisis, I have been truly fascinated by its emergence. I have done my best to understand it’s causes and complexity as they have been explained in both mainstream and academic publications. I have also followed the dialogue in the “Transforming Capitalism” conversation on the Presencing Community website.

I have been fascinated by the relationship between the invisible (structural) causes and effects of the meltdown. For me, this brings several questions to mind.

1) Is it fair to assume that the 13 Bankers in Johnson’s new book are stuck in the space of anti-emergence? I tend to think so!

2) To what extent is it possible to conduct true dialogue with them specifically and with the public at large that upholds entrenched mental models about economic freedom?

I have colleagues and friends who maintain & hold these kinds of beliefs as sacred, and it has given me the opportunity to see how difficult it is to reach anything that even approximates dialogue . . . let alone change. The system is inflexible to change, learning and co-evolving. Dialogue requires two sides which allow ideas to flow through, but in the current atmosphere of extreme fundamentalism, there is a complete unwillingness to do so.

My ideas are in the process of forming. By definition, they are incomplete, but I’m looking forward to the comments of others on this blog.

Best Regards,
Simon

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