Paul Krugman:The Banks Are Not Alright

[cal04]

http://www.nytimes.com/2009/10/19/opinion/19krugman.html

It was the best of times, it was the worst of times. O.K., maybe not literally the worst, but definitely bad. And the contrast between the immense good fortune of a few and the continuing suffering of all too many boded ill for the future.

I’m talking, of course, about the state of the banks.

The lucky few garnered most of the headlines, as many reacted with fury to the spectacle of Goldman Sachs making record profits and paying huge bonuses even as the rest of America, the victim of a slump made on Wall Street, continues to bleed jobs.

But it’s not a simple case of flourishing banks versus ailing workers: banks that are actually in the business of lending, as opposed to trading, are still in trouble. Most notably, Citigroup and Bank of America, which silenced talk of nationalization earlier this year by claiming that they had returned to profitability, are now — you guessed it — back to reporting losses.

Ask the people at Goldman, and they’ll tell you that it’s nobody’s business but their own how much they earn. But as one critic recently put it: “There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system.” Indeed: Goldman has made a lot of money in its trading operations, but it was only able to stay in that game thanks to policies that put vast amounts of public money at risk, from the bailout of A.I.G. to the guarantees extended to many of Goldman’s bonds.

(snip)
The main thing for the time being is probably to do as much as possible to support job growth. With luck, this will produce a virtuous circle in which an improving economy strengthens the banks, which then become more willing to lend.

Beyond that, we desperately need to pass effective financial reform. For if we don’t, bankers will soon be taking even bigger risks than they did in the run-up to this crisis. After all, the lesson from the last few months has been very clear: When bankers gamble with other people’s money, it’s heads they win, tails the rest of us lose.

[EFerrari]

1. Does the NYTs no longer have editors?

[MannyGoldstein]

3. What's The Problem? nt

[paulk]

4. could be a reference to

the Who's song "the kids are alright"

[EFerrari]

5. Whew!

Maybe that's it.

[LuvNewcastle]

8. Or Offspring's "The Kids Aren't Alright"

[BzaDem]

6. Hmmmmmmm. I wonder what that's supposed to mean. n/t

[EFerrari]

7. "Alright" is not a word in English. But it might be a ref

to something else as paulk points out.

[Bonobo]

2. "Alright"!?

I don't even put that non-word into video game text.

[pansypoo53219]

9. if they could break up AT&T

they can break up the banks.