Here we are at a point where it is only one or two days from a stock market crash similar to 1929. Only time can really tell us where it is going. Market sentiment seems to have taken over any underlying realities.
Australia is still looking like its fundamentals are sound but there is no escaping the affect that the USA and Europe will have on the world. Looking at a report a year ago from an ABC reporter in New York was a little scary. This reporter predicted almost exactly what is happening now. He reported that George Sorros and Warren Buffet (the most wealthy investors) felt that they could not understand the complex financial arrangements underpinning the NINJA loans and market growth in recent times.
Once again, it was not that there no warnings and that smart people were unable to work out that there was a problem. The opposite is true.
Once and for all we need to say Greed is NOT Good
How much of Gordon Gecko is still acceptable in financial markets? Up to last month, it seems that Greed was indeed considered very good. Maybe now there will be real reform and artificial manipulation of markets will be treated as a crime like it should be.
Accountants and lawyers are expected to perform their jobs with a higher level of probity than ordinary workers. Why should financial traders, financial advisors, company directors, bank executives and the people charged with regulating them be treated differently?
The role these people play in the lives of others is immense and yet somehow they are allowed to do almost what they please. Government is there to look after the people who elect it and not to look after the interests of the wealthy. Good Government demands that the balance between necessary regulation (not bureaucratic red tape but carefully targeted regulation to detect and prevent behaviour that is socially damaging) and allowing creative innovation must be found.
Are these things counter to each other? Only in “traditional” ideological perceptions of the situation. It is possible now to scrutinise problem behaviours using a wide variety of means. It is possible to treat white collar crime as being equally serious as ordinary theft and deception. It is possible to protect whistle blowers and to severely punish those who cover up evidence of crimes and deception. It is possible to license financial advisers (and perhaps even real estate sales people) and require them to take responsibility for the things they recommend as well as remove the commission incentives that cause them to recommend risky investments to clients for personal benefit (to the adviser).
It is possible to remove “innovative financial products” from the markets when it is clear that they can cause distortions to the good operation of prudential decision making.
All of these things require Government to put the Common Good before the interests of companies and lobby groups (and incidentally political donors). The Common Good is what Governments exist for, in so called democracies.