Now comes a banking fix even more frightening than seizing Citigroup and chopping it up into bits: Making banking boring!
The last hundred years, Paul Krugman explains, can be broken into three eras:
- The Roaring 20s, in which banking was a spectacularly fun and rewarding profession with superstar celebrities who made jillions…and set the world up for the Great Crash.
- The 1940s-1980s, in which banking was dull as death and (for most of this era), household debt plunged, and the country was never healthier.
- The 1980s-2007, in which banking got fun and super-rewarding again, and people like Sandy Weill said he deserved to be a billionaire on account of how much value he had created at Citigroup, etc.
Krugman wants to make banking boring again. Alas, he says, the folks in power are still dazzled by the allure of all those past-and-future consulting and speaking fees:
[P]olicy makers are still thinking mainly about rearranging the boxes on the bank supervisory organisation chart. They’re not at all ready to do what needs to be done — which is to make banking boring again.
Part of the problem is that boring banking would mean poorer bankers, and the financial industry still has a lot of friends in high places. But it’s also a matter of ideology: Despite everything that has happened, most people in positions of power still associate fancy finance with economic progress.