I think it is sometimes hard for people to imagine the nepotism of governments and the financial industry. For some, it may seem to dark to believe. I have written of this dynamic in the past, and in Juggling Dynamite.
This nepotism is one of the main reasons that financial regulators typically fail to regulate the financial industry responsibly until after implosions have scorched the earth; after Main Street has suffered real hardship.
If you ever wondered why governments seem so late to see each crisis, or why regulatory enforcers seem largely toothless, watch this clip: NY State's Economic Emergency, about the financial crisis now hitting New York's tax revenues from this past year's downturn on Wall Street.
While the tax dollars are rolling in politicians tend to opt for the collect first and ask questions later approach. Perhaps this will always be thus. Galbraith must be shaking his head from his grave.
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