Simon Johnson: Wall Street's Stranglehold on Our Democracy Must Be Broken

[Jefferson23]

AlterNet / By Zach Carter and Simon Johnson

*The progressive economist talks about the fight to reform Wall Street, what Robert Rubin should do with his money, and why Jamie Dimon is the most dangerous man in America.


April 17, 2010 |

Simon Johnson is the former chief economist for the International Monetary Fund, and co-founder of the Baseline Scenario, a blog about the financial crisis and financial reform. He is a professor at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. Johnson's latest book, 13 Bankers (co-authored with Baseline Scenario co-founder James Kwak) is a detailed examination of Wall Street's political and ideological power and the devastating economic results.

Zach Carter: Your push to break up the largest banks into smaller banks that can actually fail without wreaking havoc on the economy has been very well-received by progressives. But historically, the IMF and the Federal Reserve are not exactly hotbeds of progressive thought. How did you and Paul Volcker become the vanguard of the economic left?
Simon Johnson: The ideas that we're advancing both in Baseline Scenario and in the book should appeal to people on the right, the center and the left. There's an article by Arnold Kling that we wrote about on Baseline Scenario. He's a libertarian, which I am not, but he's come around to our way of thinking about the banks. If you think about it from the right, our financial system is just monstrously unfair. It's not in any way a market economy to have these banks who are so big that the government can't let them fail. They have funding advantages over other banks, and those advantages only encourage them to get bigger. That's just not reasonable.

The left—which coincides more with my own views than the right—is very uncomfortable with the power structure that is inherent in that imbalance. And the center--which I would also say characterizes my own views, I'm a center-left person—the center is very concerned about the effects of giant banks on efficiency and the interworkings of the economy. You can see the spectrum of appeal from the blurbs on our book.

ZC: Sen. Jim Bunning, R-Kentucky, is a fan.

remainder in full: http://www.alternet.org/economy/146470/simon_johnson%3A_wall_street%27s_stranglehold_on_our_democracy_must_be_broken?page=entire

[grasswire]

1. interesting bit here

"...Question number two is, are the incentives for the banks now to become bigger or smaller? Jamie Dimon's letter to his shareholders is very clear on this. He thinks if you do well, you should be allowed to get as big as you want. That is incredibly dangerous.


Actually, Jamie Dimon may be the most dangerous person in America today. He's dangerous because he's good. I fear the collapse of Citigroup, and I find Goldman Sachs more entertaining than anything else. They really help us because they aggravate so many people. But Jamie Dimon is smart. Jamie Dimon keeps his head down, and Jamie Dimon keeps getting bigger. Even if you think Jamie Dimon is a fantastic guy, and a savvy businessman, whatever the president said about him, which I'm not taking a side on. Jamie Dimon will not be running J.P. Morgan Chase forever. He's already lining up his successor, in fact. Whatever you think of John Reed and Sandy Weill at Citi, the fact is, they were succeeded by Chuck Prince, who was a disaster."


Every business eventually falls into the hands of somebody who doesn't know what they are doing. That is particularly true in finance, and it is particularly true at big financial institutions. So I think it's safe to say Jamie Dimon is the most dangerous man in America.

[ihavenobias]

2. # 10. Here's an in-studio interview Cenk did with Johnson this week.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x456637

[Jefferson23]

4. Thanks for that link!

[DavidDvorkin]

3. The word is plutocracy

That's what we've become. It will be hard to break the power of the plutocrats, given that they control the media and much of the Congress.