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By Owen Paine on Thursday December 17, 2009 01:43 PM

Der Volcker is back in action, and he's spraying everyone he can with a very trog-like magic bean repellent!

The useful ogre of the Carter-Reagan counter-revolution -- the man who put the figure-four submission hold on the credit system -- the author of the Volckerdaemmerung, with real interest rates even the devil himself might not accept -- is now attacking con brio the Wall Street high-fliers. l

Here's a concise sum-up by former IMF Merlin and present-day MIT mandarin Simon Johnson -- seems His Eminence is at a hi-fi banquet a while back and finds himself

"... sitting next to one of the inventors of financial engineering. I didn't know him, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity.

Much to my surprise, he leaned over and whispered in my ear that it does nothing—and this was from a leader in the world of financial engineering. I asked him what it did do, and he said that it moves around the rents in the financial system—and besides, it's a lot of intellectual fun."

"Moves around the rents"! I can just imagine the old saturnine titan chortling over that... as he added seasoning to the Hell roast he's preparing for these new-fangling "financial engineers".


Okay, take it, Paul:

"I have no doubts that it moves around the rents in the financial system, but not only this, as it seems to have vastly increased them.

How do I respond to a congressman who asks if the financial sector in the United States is so important that it generates 40% of all the profits in the country, 40%, after all of the bonuses and pay? Is it really a true reflection of the financial sector that it rose from 2½% of value added according to GNP numbers to 6½% in the last decade all of a sudden? Is that a reflection of all your financial innovation, or is it just a reflection of how much you pay? What about the effect of incentives on all our best young talent, particularly of a numerical kind, in the United States?"

... and he's confident he'll roast 'em too:
"I am probably going to win in the end."
Caveat: like other atomic freaks of the Eisenhower revival, this lovely avenger is not exactly what the job class ordered. Yes, he'd crush the golden pips off a few Wall Street slicksters -- but danger, fellow small fry! Danger! As much as that might warm our hearts, give this Abbadon a free hand and he'll delight in the jobless morass too -- the out-of-work, the foreclosed, and the formerly spendthrift among us could expect nothing from tall Paul. We'd simply go on scratching out a subsistence in the pine barrens till we've learned the hard way all the blessings of hard work, deferral of gratification, and chipmunk-like acorn storage.

Take another glance at the photo above. See the look he's casting on the Hopester? What does that suggest to you?

Comments (2)

Michael Hureaux:

I remember only all too well what it was like living as a low wage or "unskilled" worker in the service sector back in the late seventies and early eighties when this ghoul had his last turn at the crank on the national rack. And though it was plenty tough hacking out a living on less than four skins an hour in those days, my guess is that they will seem princely by comparison to what seems to be coming.

Son of Uncle Sam:

The hell with that fella, one door opens when one closes. That look is unmistakable, he's got some lint on his shoulder. Always willing to groom?

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