If only Volcker had the ears of President Obama... http://www.nakedcapitalism.com/2009...-financial-innovation-has-helped-economy.html The former US Federal Reserve chairman told an audience that included some of the worldâs most senior financiers that their industryâs âsingle most importantâ contribution in the last 25 years has been automatic telling machines, which he said had at least proved âusefulâ. Echoing FSA chairman Lord Turnerâs comments that banks are âsocially uselessâ, Mr Volcker told delegates who had been discussing how to rebuild the financial system to âwake upâ. He said credit default swaps and collateralised debt obligations had taken the economy âright to the brink of disasterâ and added that the economy had grown at âgreater rates of speedâ during the 1960s without such products. When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed ânothing at allâ, he replied: âYou can innovate as much as you like, but do it within a structure that doesnât put the whole economy at risk.â He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and âproprietary trading should be pushed out of investment banks and to hedge funds where they belongâ¦If you fail, fail. Iâm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected.â
Nice to know there are still some around who know the difference between inflated markets and healthy economies.