(nytimes.com) OP/ED from Paul Krugman
The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?
First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.
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It's not very convincing, except to the down-with-Wall-Street crowd. America now has a huge competitive advantage as the financial capitol of the world. It's only that competitive advantage that allowed the U.S. government's huge deficits to be financed at such low rates. Had the U.S. economy been de-financialized, U.S. Treasury rates would have suffered a similar fate to Canada's in 1990. [Double-digit rates, when inflation was around 5%, needed to reverse a plummeting currency.]
I find it ironic that Dr. Krugman is bashing the sector that has helped make his stimulus plans practicable.
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