The Lost Tycoons

Superb NYT article, "The Lost Tycoons", on the transformation of Wall St over the past century. Great read and insight into how things have put us where we are now. Scarce capital led 19th and early 20th tycoons to run the show, "J. Pierpont Morgan and other grandees exerted godlike powers over America". Over the years, banks and trading companies changed:

"Where the old Wall Street stuck to the most prestigious clients, the new Wall Street engaged in an unseemly rush to the bottom. Investment houses that once dealt only in grade-A bonds became swept up in junk bond mania in the 1980s. Firms that once snubbed companies beyond the Fortune 500 flocked to Silicon Valley in the 1990s, eager to take fly-by-night companies public. And, in the final reductio ad absurdum, Wall Street during the past decade gorged on mortgage-backed securities, tying its fate to America’s least creditworthy borrowers. Addicted to colossal amounts of leverage, the onetime arbiter of scarce capital had become the most profligate borrower."

"Rush to the bottom" is a good phrase we Americans are in denial about. Ours is a race to the bottom these days. Cheap capital and cheap labor are exploited through corporations and governments who dole out tax breaks and breed anti-populist rhetoric. We're not wealthy because we are smarter, but because we are willing to reward greed and look the other way when the shit hits the fan for the little guy.

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