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Former Fed chief Volcker backs change in system
Key Excerpts from Article on Website of San Francisco Chronicle (San Francisco's leading newspaper)
Posted: May 24th, 2010
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/19/...
The United States must curb consumption and credit and boost production and savings, but its citizens and leaders so far lack the will to change, economist Paul Volcker said. Volcker, 82, an adviser to the Obama administration, ... said the United States spiraled toward the Great Recession through an excess of debt that subsidized an appetite for consumer goods, many of them imported. The chief bugaboo, in Volcker's view, was a runaway financial sector that ... became a factory to make money by manipulating money. He said under-regulated financiers made big profits and bonuses by swapping derivatives and other exotic instruments that produced few of the widespread benefits - like better jobs and wages - that normally flow from investment. Now that this financial house of cards has collapsed, Volcker said, U.S. and world leaders must figure out how to stop powerful mega-banks and hedge funds from engaging in the same shenanigans that forced taxpayers to bail them out to prevent further catastrophe. "The central issue with which we have been grappling is the doctrine of 'too big to fail,' " Volcker said, alluding to how the United States bailed out institutions like insurer AIG to prevent their collapse from further damaging the economy.
Note: For a great collection of reports from major media sources on the hidden realities of the Wall Street crisis and the government bailout of big finance, click here.
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