Friday, May 20, 2011
Andrew Ross Sorkin to Piers Morgan: The financial system can break again at any time
Last night (Thursday), on CNN Piers Morgan, young NY Timess investigative reporter (and author of “Too Big to Fail”) Andrew Ross Sorkin (not to be confused with Aaron Sorkin, who screenwrote “The Social Network”) warned that the financial system can fail again at any time, suddenly, whenever one party suddenly decides that the next animal in the “food chain’s” credit is no longer any good.
One problem now is too few banks (big banks, any one of which can take a sizable part of the economy down). In the early 90s, everybody said there were too many banks. Remember how American Security got bought by Maryland National, which got bought by NationsBank, which got bought by Bank of America? Or perhaps Crestar and SunTrust?
But the main problem is trust. Money provides the “rules of engagement”, as conservative columnist Cheryl Wetzstein (The Washington Times) used to say. Even outside the monetary system, it’s a sad fact: if you think others won’t follow the rules and pay their dues, maybe “you” won’t either.
The other problem, is of course, too much debt, everywhere. In everything. As for reckoning with the debt ceiling, Congress sounds like a bunch of 1040 procrastinators.