I suspect that we\’re going to hear a lot about this:
Paul Volcker, the chairman of President Obama\’s Economic Recovery Advisory Board, stunned a business conference in Sussex yesterday, saying there is \”little evidence innovation in financial markets has had a visible effect on the productivities of the economy\”.
See! See! Even Reagan\’s arch monetarist thinks that financial innovation is not \”socially useful\”.
I also suspect that those who crow about this will be the people who do not add the second thing that he said:
He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and \”proprietary trading should be pushed out of investment banks and to hedge funds where they belong\”.
In other words, he\’s not arguing that financial innovation should be constrained, nor that \”socially useful\” is a test of whether people should be allowed to do things.
Rather, that all of this should take place without the implicit (and currently, explicit) guarantees that the investment banks have.
Which of course is a very different thing altogether.
Points will be awarded for sightings of the first being noted without the second.