The Breakdown | Explaining Southern California's economy

Bankers v. politicians: Why the financial crisis still hasn't ended

Hundreds of Occupy protesters gathered in downtown L.A. for a march through the financial district.
Hundreds of Occupy protesters gathered in downtown L.A. for a march through the financial district.
Frank Stoltze/KPCC

Here's a real barn-burner of an opinion essay from David Coates, a professor at Wake Forest who harbors no love for the global banking class — the financial elites who brought us the financial crisis, as well as the eurozone crisis, and who are currently getting rid of elected leaders in Europe at a brisk clip while doing whatever it takes to stall reform in the U.S. Not surprisingly, Coates sees Occupy Wall Street — which in recent weeks has come under siege from authorities — as being a populist movement that's trying to push back against the bankers.

This a taste of his lash, from the Huffington Post:

We live in troubled and ironic times. The times are certainly troubled. The IMF's Managing Director has recently spoken with some justification of a looming "lost decade" for the global economy — warning of "dark clouds" blocking the capacity of the world's leading economies to deliver a renewed bout of economic growth and generalized prosperity. The times are also deeply ironic: since the governing solution to those dark clouds — in countries as substantial as Italy and Greece, and in institutions as powerful as the IMF — would currently appear to be the replacement of elected leaders by appointed technocrats. The solution favored by the powerful is the transfer of state authority from democratically chosen leaders to governors drawn predominantly from the ranks of the very bankers whose inadequate supervision of their own industry darkened the skies in the first place. In this manner, a global financial crisis that initially discredited bankers has incrementally morphed into one to be settled on terms directly specified by bankers themselves. A crisis of economics has been turned into a crisis of democracy. It is an outrage.

The "technocrats will save us" argument has gained strength in Europe in recent weeks, as the prime ministers of both Greece and Italy have been forced out, replaced by trained economists. 

That said, the eurozone hasn't really settled down. Greece is a lost cause, Italy's borrowing costs refuse to stabilize, and now France's interest rates on its debt are beginning to ominously creep upward. Meanwhile, Germany, the eurozone's doninant economy, continues to fiddle as the single currency burns.

Read Coates' entire post. It's a well-reasoned analysis of why the banks got us into this mess and why they're currently fighting for their lives. I don't agree with it entirely, but as a kickoff for debate, it's welcome.

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