A New Charlie Sheen: Mark Carney

The world has a new Charlie Sheen, the governor of the Bank of England.  He is providing entertainment in the form of the deranged discourse.  In regards to the banking crisis,  responsible parties have gathered in London, and given the challenges that face our economies, here are some select quotes:

"Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself," he said. "A sense of self must be accompanied by a sense of the systemic."

So the Governor of the Bank of England notes the severity of the situation, and blames "market fundamentalism" for the failures of capitalism.  Solution?  Bankers need to think of the community more.  Bottom line though, save capitalism at all costs.

Does anyone sense any sense that the system itself is wrong?

Capitalism is by definition aggregating capital of the many into the hands of the few.  That is not debatable, it is the point, the supposed genius of the system.  Smart people get control of the lions share of the assets, and they direct the capital to smart ends.  They are self-interested in serving you by selling you things that please you.  You vote with your dollars.  There never been a system that has created so much wealth for so many, lifted so many from poverty, and providing longer, happier healthier lives in the history of mankind.  And in just over 150 years.  Think about a toothache in the 1400s, and today.

This sounds great, if you are on the winning side of capitalism.  If you are not, it does not look so good.

Funny the Gov BoE should be scolding bankers over in essence moral failings. Capitalism specifically is morally neutral according to its adherents, and lending money at usury is morally neutral, and lending credit (nothing) at usury is morally neutral.  Yet, these adherents all recognize the term "moral hazard."

It is precisely this process that yields the concentrated wealth of the very few, the malinvestment and overinvestment we see plaguing the world, and the worse example is our decade-long wars for nothing. (Your pension is on the ground in Iraq.)

Now note they blame "market fundamentalism."  That is code for free markets.  Whereas none of these problems can happen in a free market, the failed system blames the problems on the solutions.  There is your proof, nothing will change.

Some readers have challenged my views, but let's look at the points the powers that be make, and the points I've made:

The Financial Stability Board, an international body chaired by Carney, is due to publish a report shortly on how to reform the process, which currently relies on banks submitting honest estimates of representative prices.

Yes, mark to market - the assets are not there, yet putative wealth is assumed.

Carney said public trust had been damaged by the behaviour of banks both before and after the financial crisis. He cited allegations that the Libor interest rate benchmarks and prices on the foreign exchange market were tampered with.

Allegations?  It's been proven, this and ten thousand other crimes.  But they do selective enforcement, just some schmuck.  Is ten thousand too many?  It is not debatable that every day the fast traders front run the market and screw investors.  Every day.

This is a big conference, with Bill Clinton addressing, and so all newspapers cover it:

Mark Carney said bankers had operated a "heads-I-win-tails-you-lose" system. He questioned whether traders met ethical standards and said that those who failed to meet high professional standards should face ostracism.

This is an admission that the regulators cannot do the job.  This is also a classic free market response to a problem.  Who is the cop?  You are!  Ostracism would work if we had a free market, but when we have capitalism in which the cops protect the powers that be, no one has to ever say they are sorry.  Hey Carney, did you ever refuse to take a call from Christopher Cox after he outlawed shorting in 2008?  No?  He was unethical, but you kept your association?

Speaking at a City conference, the Bank's governor warned that there was a growing sense that the basic social contract at the heart of capitalism was breaking down amid rising inequality. "We simply cannot take the capitalist system, which produces such plenty and so many solutions, for granted. Prosperity requires not just investment in economic capital, but investment in social capital."

Deranged!  A social contract among whom?  Capitalism is a system forced on the citizens in favor of which legislatures and judges rule, over time, so patterns and practices benefits the few.  Again, the point, the rationale, is inequality is good, yet Carney says this ought not be.

He said one of the lessons of the crisis was that compensation schemes that delivered large bonuses for short-term returns encouraged individuals to take on too much long-term risk. "In short, the present was overvalued and the future heavily discounted."

Was?  We are past that now?  When was this problem fixed?  So the governor of the bank of England on one hand notes there is a problem with mark to market, but on the other hand says it was in the past. Nothing will be done to save your pension, because no one will admit there is a problem.

Carney said that ultra loose monetary in the UK had helped to prevent a lost generation of long-term unemployed, and improved long-term social mobility prospects.

Charlie Sheen could not say this with a straight face.

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