Thursday, February 14, 2013

Finance sector drowning in liquidity while Main Street has a drought

Banks, brokerages and other entities in the financial sector endlessly justify many of their actions by pointing out that this action or that fiscal instrument increases liquidity and that is a good thing. This is a reason that companies that make high speed, high volume automated trades based solely on algorithms analyzing trends cite to justify their existence in spite of their ability to crash markets with an errant keystroke. My response is "So what?". The financial markets and liquidity within them are meaningless within the bubble they've created for themselves. If they are not connected with the real world and human needs, what we think of as the Main Street economy, then they are a meaningless sideshow. As this article from the Washington Post shows, even as a flood of liquidity sloshes around the world financial corporations drowning them in so much money that they have no idea what to do with it, the people who need money and have none because of being unemployed or underemployed have none. They suffer from a drought that crushes hope and self-respect and that, unlike a drought that nature inflicts, human beings can end if they so choose. But the bubble protecting Wall Street and its foreign cousins from the reality of the consequences of their actions seems to be impervious.