Side Effects & Symptoms

What’s going on with the haywire stock market?

No one can say for sure — and it’s likely multiple causes, anyway.

But here’s a (rather roundabout) theory.

What’s happening now with the stock market — indeed, the entire economy — is a symptom, a side effect.

Zero percent interest rates, high unemployment, economic malaise, staggering debt — you name it.

The real culprit is society’s failure to adequately hold Wall Street to account for its execrable — and costly — behavior.

Historical Analogy

If you want a parallel, think about the period just after World War II.

What policies and actions — at least by government — lay the groundwork for post-war prosperity?

Abroad, the Marshall Plan helped a devastated Europe recover.

At home, the GI bill gave millions of returning servicemen the chance to go to college, and ultimately become contributors to a robust, vibrant economy.

But I’d argue that it was the Nuremberg trials that truly under-gird society’s post-World War II healing.

Wall Street Wrongdoing

By convicting Nazi leaders in a public court of law, the Allies showed that they were not only physically superior to Nazi Germany, but morally superior as well.

That’s because they conducted their affairs in accordance with the rule of law.

That’s what gives a society moral legitimacy.

In the aftermath of The Crash of ’08, there has yet to be accountability for rampant Wall Street wrongdoing.

Until that happens, the financial system will be plagued by a lack of moral legitimacy, and no one should be surprised if an unreformed Wall Street continues to behave erratically.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.
4 Responses
  1. Irwin

    Your theory assumes that if a bunch of Wall Street executives were tossed into prison investors would regain confidence in the markets and invest more funds. So what if they did? I fail to see how this would solve our problems of “high unemployment, economic malaise, and staggering debt.”

    What our economy needs is a large infusion of federal spending to get money into the hands of consumers.

    You confuse two distinct domains: economics and retribution.

  2. Ned

    I agree with you, but what rule of law did Wall Street break? We can be as indignant as we like, but “wrong” does not always equate to “illegal”.

    1. I think a good prosecutor could find 10-15 counts for fraud, misrepresentation, breach of fiduciary duty, gross negligence, etc. just from Michael Lewis’ “The Big Short.”

      Of course, it’s a lot easier to assert that “no laws were broken” when YOU made the law(s).

  3. Irwin

    Moral legitamacy can never be achieved simply by adherence to the rule of law. There is more than a grain of truth in that old saying, “You can’t legislate morality.” The source of morality is found in community. It is not a “trickle-down” phenomena.

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