Thursday, July 16, 2009

Goldman and financial regulatory reform

Robert Reich puts it much more elegantly than I could, but Goldman doing well is a sign that NOTHING has changed on Wall Street.

Caveat Emptor!!

It is business as ususal because that is the only way that Wall Street can function. This is actually a good thing. We want NYC to recover and money to start flowing. What has hopefully changed since the crisis is that we have reordered our thinking. Perhaps getting rich quick is flawed as a life goal and perhaps we should, as we all grew poor together, begin to appreciate the plight of others. Finally, maybe what we collectively learned from the Global Financial Crisis will inform financial regulatory reform as well.

Goldman's large profits give us hope. The upcoming December 2009 African Stock Exchange Association (ASEA) meeting is entitled The Global Financial Crisis: Opportunities for the African Capital Markets. This is encouraging. There are investment and growth opportunities. New opportunities, ideally, will be vetted with our more experienced eyes. We now understand how interconnected we are and that the bottom can fall out from under us.

In terms of the law here and in Sub-Saharan Africa, financial regulatory reform, as a response to the GFC, must be critically scrutinised. We want laws that protect against future ponzi schemes without crushing financial innovation. We also need to somehow hold accountable the businesses that have the power to alter our individual economic futures. 'With great power comes great responsibility.' (Thank you, Uncle Ben!) Realistically, we will never get laws, any time soon, that stop Goldman from being number one at everything that it does. Goldman is the factory that perpetually churns out all of our future government financial advisors. Also, as time has passed, discussions about Anglo-American, predatory capitalism have died down-lost traction and momentum. In my opinion, that kind of dialogue has the best chance of yielding reform ideas that ensure we do not wind up here again.

For emerging markets in Africa, Capital Markets Authorities must continue to create hybrid approaches to financial, mostly securities, regulatory matters. Wholesale adoption of deveopled markets financial laws is no longer sound-if it ever was. Regulation must continue to be based on domestic needs and perspectives. Exchanges are not natural to many of the African economies that I consider in my research. The laws that govern them are a mix of Western and African. This hybrid can mature and develop as the exchanges grow.

Historically, Titans of Industry, monopolies and powerful financial houses helped America become an economic power albeit in exploitive and oppressive ways. Eventually, people grew tired of the disparity between the rich and poor hence labor and competition laws were passed. We are not tired enough of the disparities that have developed over the last quarter century in the states and globally. The sense I get is that Americans increasingly hope things quickly get back to 'normal.' Before THAT happens, I hope things change.

No comments:

Post a Comment