High Marks for Firefighting. Low Marks for Fire Prevention
Thus far, I've managed to read about ninety percent of Secretary Geithner's new book, "Stress Test". At nearly six hundred pages, this tome is a first-hand account of the 2007 financial crisis that nearly upended the US financial system, forced millions of American homeowners into foreclosure and resulted in millions of lost jobs.
I think Secretary Geithner's book reflects humility and balance in that he acknowledges the mistakes that he and other senior government finance and economics officials made during the crisis (US Treasury, Federal Reserve Bank of NY and Board of Governors - Federal Reserve System). I feel that Secretary Geithner, Secretary Paulson and Governor Bernanke (and their staff) deserve high marks for their tireless efforts and skill in working to contain the catastrophic situation that materialized once the sub-prime lending market and related securities began to collapse but I'm also feeling that there's a lot to be done with regards to preventing these sorts of financial meltdowns in the future.
Secretary Geithner pointed out in his book that Governor Volcker believes that the last useful innovation to come from the banking and financial services industry was the ATM. He has also pointed out that Warren Buffett believes that derivative securities are financial weapons of mass destruction. Yet, we see no effort by the US Congress or banking and financial services regulatory agencies to do anything to restrict such highly unpredictable, insidious and destructive instruments from the marketplace.
I believe we need a coordinated effort across the G20 to disallow these variants of Russian Roulette rather than trying to manage them. Mike Tyson had said that all boxers have a strategy until they get punched in the face. After that, everything changes. We have to acknowledge that derivative securities are far too dangerous, unpredictable and unmanageable - unfortunately, Secretary Geithner seems unwilling to concede on this issue.
I think Secretary Geithner's book reflects humility and balance in that he acknowledges the mistakes that he and other senior government finance and economics officials made during the crisis (US Treasury, Federal Reserve Bank of NY and Board of Governors - Federal Reserve System). I feel that Secretary Geithner, Secretary Paulson and Governor Bernanke (and their staff) deserve high marks for their tireless efforts and skill in working to contain the catastrophic situation that materialized once the sub-prime lending market and related securities began to collapse but I'm also feeling that there's a lot to be done with regards to preventing these sorts of financial meltdowns in the future.
Secretary Geithner pointed out in his book that Governor Volcker believes that the last useful innovation to come from the banking and financial services industry was the ATM. He has also pointed out that Warren Buffett believes that derivative securities are financial weapons of mass destruction. Yet, we see no effort by the US Congress or banking and financial services regulatory agencies to do anything to restrict such highly unpredictable, insidious and destructive instruments from the marketplace.
I believe we need a coordinated effort across the G20 to disallow these variants of Russian Roulette rather than trying to manage them. Mike Tyson had said that all boxers have a strategy until they get punched in the face. After that, everything changes. We have to acknowledge that derivative securities are far too dangerous, unpredictable and unmanageable - unfortunately, Secretary Geithner seems unwilling to concede on this issue.
No comments have been added yet.
