Financial analyst says Wall St. money culture of credit bubble not coming back...

[kentuck]

...for a long time. It took a few generations for Wall St to recover after the Great Depression. With the election of Ronald Reagan in 1980, the Wall St free-market culture became in style once again. And once again, we see the same results. And, as in 1929, we had the Republican Party supporting the same policies once again. And they were in the wilderness for 40 years...Can we expect the same sentence for the Republicans with this debacle??
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http://www.nytimes.com/2009/02/22/opinion/22rich.html?_r=1&ref=opinion

<snip>
For all the gloomy headlines we’ve absorbed since the fall, we still can’t quite accept the full depth of our economic abyss either. Nicole Gelinas, a financial analyst at the conservative Manhattan Institute, sees denial at play over a wide swath of America, reaching from the loftiest economic strata of Wall Street to the foreclosure-decimated boom developments in the Sun Belt.

When we spoke last week, she talked of would-be bankers who, upon graduating, plan “to travel in Asia and teach English for a year” and then pick up where they left off. Such graduates are dreaming, Gelinas says, because the over-the-top Wall Street money culture of the credit bubble isn’t coming back for a very long time, if ever. As she observes, it took decades after the Great Depression — until the 1980s — for Wall Street to fully reclaim its old swagger. Not until then was there “a new group of people without massive psychological scarring” from the 1929 crash.




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[Frustratedlady]

1. If they'd behaved themselves, they wouldn't be in the pickle they find themselves in.

I don't know how many times mutual fund salesmen would say in reply to...what happens if there is another Depression? "Oh, that isn't likely to ever happen again, as there are safeguards....!"

Right!

[madokie]

2. There were safeguards

operative word being WERE

[PDJane]

3. As they were busily pressuring the government

to dismantle those very safeguards.

[PDJane]

4. dupe....mea culpa.

[Double T]

5. humans are idiots. they never learn from their mistakes.

history continues to repeat itself again and again; economic depressions are no different. greed rules most human behavior. the current economic depression has no end in sight. Future generations will continue to live our current economic and financial nightmare.

[meeloo]

6. Our system will continue to....

go through continued cycles of regulation and deregulation. It's like a swinging pendulum

[Frustratedlady]

10. I thought our moral pendulum was supposed to swing, too...

I think it got stuck.

[HamdenRice]

7. Wall Street work used to be fairly modest.

I person who made a million dollars was a rarity. It was kind of an upper middle class, but certainly not rich, profession.

You can the the transition in the movie Wall Street -- the transition from the Hall Holbrooke type Wall Streeter to Gordon Geiko.

[Turbineguy]

8. He's right.

Wall Street will have to go back to their original business, the business of matching producers and entrepeneurs with investors.

And they will not be able to suck $1 trillion per year out of the real economy for doing that.

That is the real cause for this meltdown.

By floating all sorts of derivatives and fantasy land "investments", they created this mess, getting rich along the way.

[azul]

9. Should it ever come back?

If there cannot be some sort of standard backing up the financial system will there ever be a bottom to the busts in this cyclic ride? This is a fiat money bust and we are into uncharted territory borrowing on unlimited credit to cover credit defaults.

The whole house of cards was built on clever credit instruments that did no real work but inflated the money supply without any standard to back it up.

The whole financial system needs a restructuring and regulation makeover.