Atlanta Weather

| Traffic

Search
Cynthia Tucker

In a decade, Wall St. will cause another economic meltdown

8:31 am September 15, 2009, by ctucker

Here’s a gloomy prediction: Within ten years, Wall Street recklessness will precipitate another economic crisis, this one even worse than the one that started last year. There is no will in Congress to enact the major reforms that are needed to keep financiers from driving us all over a cliff. Congress is in bed with lobbyists; there is virtually no public pressure for the reforms that are needed; and greed continues to be a driving factor in the human psyche.

The president gave a good speech yesterday, calling for reform:

Normalcy cannot lead to complacency. 

Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them.  They do so not just at their own peril, but at our nation’s.

So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.  Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.  

That’s why we need strong rules of the road to guard against the kind of systemic risks we have seen.

There’s just one problem with Obama’s analysis: We’re already back to the days of reckless behavior. Wall Street is back in the business of creating new and dangerous financial instruments that its masters of the universe do not understand. Outrageous bonuses are back since bankers have a stunning lack of self-awareness; they simply refuse to believe that they caused the economic meltdown. And Wall Street has moved an oceanliner of lobbyists to Capitol Hill to make sure its financiers can keep doing business as usual.

The lack of public pressure for reform stems from several factors, one of which is the overwhelming complexity of the financial system and the inability of many taxpayers to put a finger on just who did what to whom. After all, this financial debacle was years in the making. Besides, rightwing commentators were quick to blame average working stiffs for the crisis, claiming that the government had forced banks to make bad loans. As it now apparent, the government can’t make the banks do anything. Financiers made those bad loans because they were quite profitable.

But the biggest problem is this: Many taxpayers believe the government should have simply allowed those big banks to fail, just like any other business that makes bad decisions. That response certainly seems right. But the counter-intuitive truth is this: if the Bush and Obama administrations had not stepped in with extraordinary measures, we’d likely have had another Great Depression and a lot more Americans would be living in tent cities. The economy may not be great at the moment, but it could have been a lot worse.

And what did Wall Street learn from the government bailout? Its financial houses are too big to fail, and the taxpayers will always be forced to bail them out. So buckle up. The ride is going to continue to be rocky.

  • Print

28 comments Add your comment

Carter is a Fool

September 15th, 2009
9:16 am

Cynthia Tucker
In a decade, Wall St will cause another economic meltdown — Obama will do it 24 months if his massive spending and taxing are passed. Programs such as Cap and Trade are just tax programs designed to solve the fictional global warming and stifle the production of jobs by small business by overloading them under a mountain of new government red tape and regulation.

This does not even mention the new government bureaucrats by the thousands who will be hired to manage the government’s healthcare plan.

Save us from the red tape.

Carter is a Fool

September 15th, 2009
9:16 am

First. Yeah.

Patrick

September 15th, 2009
9:27 am

The only people who comment on editorials are people that are incapable of forming their own opinions. This person’s entire job is to be “controversial” so you people will read her column and argue and fight. This so called “journalist” doesn’t care if you agree or disagree. She only cares that you read her column so she can keep her job. You people are really a very sad group.

AmVeterinarian

September 15th, 2009
9:32 am

Patrick you old dirtbag – I guess you are part of the sad group, because you left a comment.

jconservative

September 15th, 2009
10:04 am

Patrick September 15th, 20009 9:27 am
“The only people who comment on editorials are people that are incapable of forming their own opinions.”

Patrick! Welcome to the club! Really glad to have you aboard!

Grumpy

September 15th, 2009
10:08 am

“if the Bush and Obama administrations had not stepped in with extraordinary measures, we’d likely have had another Great Depression and a lot more Americans would be living in tent cities.”

====> Please show your work, Ms. Tucker. I’m sick of the hyperbole being tossed out by both the Bush camp last fall and the Obama camp this year. There were a myriad of more subtle measures that could have been taken, and a GREAT DEPRESSION still would have been averted. But Bush and Obama went to the absolute extreme with their big government solutions. Everyone thinks “too big to fail” is a bad idea, yet one of their solutions to the crisis is to allow Wells Fargo to buy Wachovia. How does that make any sense?

And you ask “what did Wall Street learn”…why don’t you ask what your precious big government learned? Because the bubble is being reinflated right under our noses and no one in Congress seems to care.

TnGelding

September 15th, 2009
10:12 am

The recession is over for everyone but the unemployed, and they’re going to have to make drastic lifestyle changes with much help from the government and the rest of us.

It’s the overleveraging at the big banks, not necessarily their size, that’s the problem.

jconservative

September 15th, 2009
10:23 am

I agree completely with the broad context of your column.

As a country boy I would say that the original problem was the foxes in the henhouse. The problem a year later is that the foxes are still in the henhouse.

The Pres of Goldman goes to Washington & talks everyone into a 40 to 1 liability ratio for banks. Bush 43 makes him the Sec of the Treasury.
Fox in the henhouse. Same with Congress & the WH. Now the people who helped de-regulate are the regulators, Sumner, Geithner, Frank, Dodd. Foxes in the henhouse.

Who owns the foxes? “…Wall Street has moved an oceanliner of lobbyists to Capitol Hill….”

Had Enough

September 15th, 2009
10:50 am

Why does the AJC continue to let Cynthia Tucker shoot her mouth off about subjects she knows nothing about. Cynthia stay on MSNBC’s Hardball where you belong and leave us alone.

XYZ

September 15th, 2009
10:57 am

Great work, Cynthina!

Patrick

September 15th, 2009
11:11 am

President Obama trying to discipline Wall Street reminds me of mothers trying to discipline small children in the grocery store. They promise dire consequences if the child doesn’t stop but in the end give into whatever the child wants.

Children and Wall Street understand it isn’t what you say, it is what you do. Having bailed out Wall Street once, with no real consequences to the “masters of the universe” there is no incentive to change their high risk, high reward behavior. Quite frankly the bailout started by President Bush and continued by President Obama only provides incentives to even higher risk/higher reward behavior in the future.

Government interference in the financial markets, American automobile industry, banking industry and potentially health care is preventing nature from cleansing the system of the weak. So you wanted some vague concept called “change”. Now you have it and you don’t like it. Next time be careful what you ask for.

El Jefe

September 15th, 2009
11:18 am

This smacks of a lead in to the take over of the financial sector by the Democrats. Makes you feel real secure.

Let bad business’ fail. Wean the US off of Freddie and Fannie, they are a source of corruption.

Marc

September 15th, 2009
11:23 am

After reading Cynthia stuff I wonder what they teach in Journalism. I do know what they don’t and that’s critical thinking.

The Other Patrick

September 15th, 2009
11:26 am

The Patrick comment at 11:11Am was actually me, not the earlier Patrick. Didn’t want to confuse anyone.

DebbieDoRight

September 15th, 2009
12:23 pm

Well, the good thing is that IF Wall Street causes another meltdown so soon after the first one, there will DEFINITELY be stronger legislation put in place then. Wall Street is playing russian roulette with a loaded pistol to their own ruin.

C K Hall

September 15th, 2009
12:30 pm

I guess Ms Tucker is now a financial guru who knows all!

barney frank

September 15th, 2009
12:39 pm

Cynthia ,sweet cheeks, you are my type of guy !
Barney [cram down] Frank

jconservative

September 15th, 2009
12:44 pm

By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa
WASHINGTON – Federal Reserve Chairman Ben Bernanke said Tuesday that the worst recession since the 1930s is probably over.

Bernanke said the economy likely is growing now, but it won’t be sufficient to prevent the unemployment rate, now at a 26-year high of 9.7 percent, from rising.

“The recession is very likely over at this point,” Bernanke said in responding to questions at the Brookings Institution.

The Fed boss also said he is confident that Congress will enact a revamp of the nation’s financial rule book to prevent a future crisis from happening.

“I feel quite confident that a comprehensive reform will be forthcoming,” Bernanke said. It has been “too big a calamity” over the past year, with the near meltdown of the U.S. financial system, for Congress not to take action, he added.

—————

What does this man know that the rest of us do not? He is a loy more confident than I am about regulatiins gettimng through congress.

RealityKing

September 15th, 2009
12:50 pm

In the next decade, Obama’s progressively reckless deficit spending will create a catastrophic economic meltdown like Americans has never seen. One that Cynthina is already looking to blame on Wall Street..

Robert

September 15th, 2009
12:52 pm

AGAIN!!! Cynthia. Who hired you??? And WHY???

Alice in Wonderland

September 15th, 2009
1:01 pm

Who said the recession is over? Ha Ha Ha. I’ve got to get some of those rose-colored glasses. They must be marvelous.

RealityKing

September 15th, 2009
1:10 pm

The recession IS over…, welcome to the progressive pigsty.

Mrs. Norris

September 15th, 2009
1:12 pm

I’m pretty much a conservative and I don’t believe in a lot of government spending but if the government was hell-bent on borrowing and spending billions of dollars for a bailout, why didn’t they just give that money to people who couldn’t pay their mortgage? That would have saved them, the banks and the housing market. Everybody wins. The housing market still stinks, in case you didn’t know. No, they gave all that money to the robber barons who caused it all and the working man is just s- out of luck. Washington is full of crooks and morons, Republican and Democrat alike. And they say the Tea Partiers are loons because they don’t want to pay more taxes. I know how Alice feels.

Thomas Jefferson

September 15th, 2009
1:15 pm

A man that cannot be trusted with the government of himself cannot be trusted with the government of others.

Jimmy62

September 15th, 2009
1:28 pm

You mean in a decade the government will have created more bad incentives causing businessmen, doing exactly what they are supposed to do- make a profit- to discover they can make a profit in a way that hurts the economy. If only the government would stop making bad incentives.

Timothy Geithner, Goverment Sachs U.S. Treasurer

September 15th, 2009
1:57 pm

Actually Cynthia, it will be a little less than a decade.

Thank you.

pat

September 15th, 2009
3:41 pm

Whatever Nostradamus….There’s alot more to the economic meltdown then just Wall St. How about all the deadbeats who took out loans thay could not pay, they deserve no culpability I suppose…..God it’s beautiful to be a deabeat in America….You get so much support it’s almost not worth working anymore.

AmVeterinarian - Practicing in Farm Animals with a specialty in Swine.

September 15th, 2009
4:09 pm

Unfortunately Sinthia is right. As to “when” it may happen… opinions vary.

Pat – those same deadbeats are still here and will take out those loans that they can’t pay – if the banks let them.