The Market Mystique (Paul Krugman)

[Rodrigo L. Medeiros]

By PAUL KRUGMAN

(…) it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.

The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.

Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and puréed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans - all went into the financial system’s juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process.

But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization - that it would make the financial system more robust by spreading risk more widely - turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption.

Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization - and the business of finance - can resume where it left off a year or two ago.

As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.

[Fabiano A. S. Dalto]

Oi, Rodrigo

Não me parece que exista algo a discordar dessa opinião autorizada a respeito do funcionamento dos mercados do Krugman. Adicionaria, entretanto, que enquanto no campo progressista os empréstimos predatórios e a dominância financeiras não devam mesmo "come back to life" isso não é tudo. Associado a essa discussão está a necessidade de uma reformulação profunda das estruturas financeiras e mesmo da economia capitalista como um todo. Seguindo Minsky, a crise atual mostra que "financially complex capitalism is inherently flawed", ou seja, "the truth of the matter is that something is fundamentally wrong with our economy". Nessa linha Minsky propõe o que considero nossa mais imediata necessidade nos dias atuais, e que tem sido esquecido particularmente no Brasil mesmo por aqueles que se dizem Keynesianos (quem não é Keynesiano nos dias de hoje?). isto é, que as questões econômicas "must become a serious public matter and the subject of debate if new directions are to be undertaken." Isso implica reformulações institucionais e de intervenções políticas muito mais complexas do que as, muitas vezes, inóquas mudanças do nível de juros, marginais mudanças na política fiscal e etc. "Meaningful reforms cannot be put over by an advisory and administrative elite that is itself the architect of the existing situation. Unless the public understands the reason for change they will not accept its cost; understanding is the foundation of legitimacy for reform." (Stabilizing an Unstable Economy, cap.12). Enfim as reformas precisam ser "bold", profundas, e devem ser estabelecidas em um nível muito maior de democracia participativa ("socialização dos investimentos").
Abraços,

Fabiano