Originally Posted by Don Zeko
Me, I'm still trying to figure out exactly what Carney's point was. After all, IMF Global wasn't bailed out, which is the quid pro quo that Carney thought investors were imagining. So we're left with a financial firm that failed, and that had made some staffing decisions at least partially on the basis of trying to get access to powerful politicians. This is both incredibly unremarkable and no more grist for Carney's particular mill than it is for anybody else with opinions about what's wrong with the relationship between Wall Street and Washington and how to fix it.
I think Fernholtz jumped on Carney because he thought Carney was trying to set-up the situation as a case of some sort of political corruption with ties to the whitehouse etc. This was another example of fernholtz being a bit of an idiot because he was listening to what he expected to hear rather than what was being said. I really don't think that was Carney's point.
I think Carney was pointing out that even with everything that has been done since the financial collapse, investors are still counting on political connections to be well worth paying a little extra for - and the principal clause in the contract was evidence for that. I imagine Carney was a bit shocked at Fernholtz's reaction considering that he would be expected to agree with Carny's assessment - namely that the big money people have not seen anything to make them fear that they could be the subjects of market forces like the peons are.
the collapse of MF-ing global could be the first sign of things changing, we'll have to see how it shakes out. on the other hand, it is small enough that it may not be much of a data point.