A Real Good Reason To Not Vote A Businessman Into The White House

Many Americans (okay, mostly white Americans who vote Republican) say we need a President who will run the country like a business - I think this is because most of them don't understand how the economy really works.

I recently read an article, "Masters of the Universe but Slaves of the Market: Bankers and the Great Financial Meltdown" by Stephen Bell and Andrew Hindmoor, in the British Journal of Politics and International Relations, and I think I'm finally beginning to wrap my mind around how starting in the 1980s, the privileging of the financial sector over the real economy almost collapsed global capitalism if it hadn't been for government intervention to save Capitalists from themselves.

Capitalists unleashed is dangerous for America!

One of the most popular explanations of the banking crises of 2007-08 (you would have heard this one a lot if you watched Fox News during the crisis), was due to imprudent mortgage lending to black and brown people because of the Community Reinvestment Act of 1977 which encouraged banks and other lending institutions to meet the credit needs of communities they operate in.

But, according to Bell and Hindmoor, banks and financiers (with the cooperation of political elites in both the Democratic and Republican Party) created the greatest financial crisis in the history of capitalism all because they pushed for and got the liberalization and deregulation of financial markets they wanted under the wide-spread, but false assumption, that markets are self-regulating and that banks that make poor decisions would be disciplined by the market.

What they didn't count on was how competitive market pressures and the insatiable pursuit of profit opportunities by bankers and financiers would create the kind of systemic risk that could topple the entire global financial system (specifically, in order to get ever-higher return-on-equity, they engaged in highly risky leveraged-trading activities and created exotic/complex financial instruments that neither they nor the so-called regulators fully understood).

By the time the sub-prime mortgage security market collapsed (IMF estimates the declared loses to be $500 billion) in 2008, panic set in about the value of other securitized assets (which tended to have AAA bond ratings due to a rigged bond rating system) because they really didn't understand what they had created, could not control what was happening as the crises unfolded, and simply wanted out before they went insolvent due to the loss of value of securitized assets on their balance sheets and low capital buffers due to so much leveraging.

They got the neo-liberal system they wanted, but rather than become "Maters of the Universe, they became slaves of the market they created.

So, yeah, let's put Trump in control and deregulate the economy and unleash privatization and marketization even more and see where that will land us.

My guess is that it'll land most of us in the poor house.


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