The Cult of Finance

I mentioned the “cult of equities” earlier this morning; An article in the Atlantic on the Cult of Finance is making the rounds:  The Quiet Coup.

I found it very similar to Bailout Nation. If this sort of stuff floats your boat, then you will love the book — it gets much more granular than the Atlantic piece does.

Anyway, this is the section that I thought was pulled right out of chapter 20. Casting Blame. Regular readers of TBP will recognize most o these elements:

From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing:

• insistence on free movement of capital across borders;

• the repeal of Depression-era regulations separating commercial and investment banking;

• a congressional ban on the regulation of credit-default swaps;

• major increases in the amount of leverage allowed to investment banks;

• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;

• an international agreement to allow banks to measure their own riskiness;

• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation.

The mood that accompanied these measures in Washington seemed to swing between nonchalance and outright celebration: finance unleashed, it was thought, would continue to propel the economy to greater heights.

What he calls the Cult of Finance I would describe as the “Deification of Markets” . . .


The Quiet Coup
Simon Johnson
Atlantic, May 2009

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