Tom Wolfe Visits Wall Street Again
The NY Times, or 'the paper' in the everyday vernacular, had a good article today about Tom Wolfe, the wonderful and spot-on social satirist and author of the anthemic 1980s Bonfire of the Vanities, who visited Wall Street one year ago when the biggest Initial Public Offering of all time was traded, e.g. when the private equity fund Blackstone went public for $30 billion.
At the time Wolfe said it was the end of capitalism as we know it, or words to that effect. Sorkin in his Time's column sums up the changes in the last year; 83,00o financial sector job losses, billions of dollars in losses by finance houses, the subprime mess, the growth of sovereign funds, the malaise of the Dow. Wolfe: "Stocks and bonds are what Schumpeter called evaporated property. People completely lose touch of the underlying assets. It's all paper - these esoteric devices. So it has become evaporated property squared."
Over the past year too economists have been talking alot about financialization, the taking over of the economy by finance. All this is ok, it is what happens in the market. The market is for gamblers better use your sense, to paraphrase Bob Dylan. So the last thing we need is the regulators or the Fed stepping in to correct something which isn't broken, to reward those that are guilty of creating the paper mess without judging their own risk or by knowing that they would eventually be bailed out by the taxpayer or by some kind of superficial regulatory bandaid to just innovate around while providing a false sense of security to the common man.
We just were a little misdirected in the near-term. Such is life. It'll happen again too, so hopefully we won't in the interim build-up some kind of New Deal government which will prolong and enlarge unemployment and prevent people from being engaged in worthwhile non- illusionary activities.