Monday, September 14, 2009

Banks at it again?



            Today, the one year anniversary of  the Lehman Brothers clollapse which set off a wave of panic in the financial industry. In Hong Hong protesters are outside of banks who sold them financial products by Lehman Brothers and say they want their money back. The Government let Lehman fail but stil poured hundreds of billions of tax payer money into the financial industry with a catch ofcourse. Limits were placed on how banks operate; how many times they could leverage their bets, how much companies could be paid. A year after and MorganStanely, JPMorganChase and GoldmanSachs have repaid their bailouts and are free from Governtment restraints to a degree. Risk taking is back, but some say risk can inspire confidence and allows capital markets to function normally. Nonetheless, a push for profits can lead to excessive risk taking
        JPMorganCHace, MorganStanely, GoldmanSachs and other are now regaining their appetite for risk, betting lavishly on bonds, commodities and exotic financial products. Wall street is repeating the cycle that lead the banking system into chaos. Banks may not be the ultimate culprit but government's response to spend whatever it took to protect the financial system from collapse may also be a factor, this precedent may encourage even greater risk taking from the private sector. Many Americans were troubled by this, asking, where's my bailout? 
     In a speech today, President Obama says that, "the storms of the past two years are begining to break," and, "we will not go back to the days of reckless behaviour and unchecked excess that was at the heart of this crisis." Regulation of the financial industry will not be easy. With all the bailouts and talk of a government run health care program many feel like the government has gotten way too big. Conveniently, companies who begged the Government for 'bailouts' are now saying they do not want the Government medling in their affairs. Congressman Ron Paul has proposed a bill to audit the Federal Reserve; he says they are the source of the problem.

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