By Steven Malanga
As members of our two houses of Congress reconcile their differing financial regulatory bills into one piece of legislation that they hope will bring more transparency and supervision to Wall Street, you have to wonder: Where is the debate about reforming the fiscal practices of government?
If one thing is clear as the world financial situation proceeds from one crisis to another, it is that politicians have been as crafty in their fiscal maneuvers as any Wall Street trader, as opaque in the deals they construct as any maker of swaps contracts, and as motivated by short-term self interest as any investment banker who puts together a complex security likely to explode shortly after he’s peddled it.
By now, for instance, many people understand that Greek politicians kept two sets of books for some time in order to hide the true nature of their deficits, and to give workers a higher standard of living than the country could actually afford.
Less well understood, perhaps, is how the rest of the European Union encouraged that bad behavior when it allowed banks to load up on the debt of Greece and other EU nations by not requiring the bankers to carry this national borrowing on their books in quite the same way they account for other loans, because of course countries don’t default on their debt (except when they do). The capital charade helped make a farce of the EU’s guidelines on national deficits. It also made it necessary for Germany to bail out Greece because Germany was really bailing out its own banks.
But why pick on Europe when we have so much glaring fiscal malfeasance in the U.S.?
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