Seldom in our 230-odd years as a country have Congress and the White House had the fortitude to impose on American bankers and financiers a set of regulations sufficiently stringent to prevent them from pushing us into destructive panics and recessions. And once again Washington may be demonstrating its lack of backbone.
As Simon Johnson and James Kwak recount in “13 Bankers: The Wall Street Takeover and the Next Financial Meltdown,” the struggle to keep bankers in check goes back to Thomas Jefferson and Andrew Jackson, with results that have usually been mixed. Given the leeway to undermine the economy, bankers and financiers have done just that.
To put it bluntly, as this book does: the efficient-market hypothesis does not work. It never has. Markets are not self-correcting. Left to their own devices, bankers at the biggest institutions can’t seem to stop themselves from speculating with borrowed money until they inevitably crash the system.
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