CAMBRIDGE – Who will suffer the longest and the most from the implosion in 2008-2009 of Wall Street and the ensuing world recession?
Not the bankers and financiers who created the disaster. Some financiers, like Bernard Madoff, will go to prison for fraud. But, although Madoff was only the tip of the iceberg of rampant financial malfeasance, most suspect financiers need not fear arrest, either because their behavior merely skirted the law, or because financial impropriety more subtle than outright fraud is often difficult to prove.
Some bank bosses will retire in shame, but with huge payments to ease their pain – such as the $55 million golden parachute handed to Bank of America’s Ken Lewis, with his, and the £25 million pension bestowed on Royal Bank of Scotland’s Fred Godwin. But, buoyed by government bailout money, guarantees, and low interest rates, many banks have again begun to pay their top managers huge bonuses while fighting vigorously against reforms designed to restrain their risk-taking and compensation.
The big losers from this economic disaster are workers in the advanced countries that bought into the laissez-faire flexibility of American-style capitalism. From 2007 to October 2009, the United States lost nearly eight million jobs, which reduced the employment-population ratio from 63% to 58.5%. The unemployment rate at the end of 2009 was above 10%, duration of joblessness was the longest since the Great Depression, millions had had their working hours cut, and millions more were too discouraged by a lack of jobs to seek work.