Weekend Economists Tickle the Ivories September 20-22, 2013

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40. and...5 years after financial crash, many losers — and some big winners

Corporate America, banks, the super rich and the index investing concept have gained. Savers, low-skilled workers, many homeowners, and stock exchanges have suffered.

For some major players in the economy, the financial crisis that began five years ago this month with Lehman Bros.' collapse turned out to be as much an opportunity as a calamity.
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WINNER: The banks. In the second quarter of this year U.S. banks earned a total of $42.2 billion — the biggest industry profit in history, and double the earnings of the same period in 2010. "We turned the entire resources of the nation toward one goal: setting up a situation where the banks could earn their way out of this," said Barofsky, now an attorney at Jenner & Block in New York. The plan was not, he lamented, "about holding institutions accountable" for the debacle....Yet in the longer run, TARP was less significant for many banks than the aid of the Federal Reserve under Chairman Ben S. Bernanke.
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LOSER: Savers. The Fed's decision to keep short-term interest rates near rock bottom for nearly five years has devastated the income of tens of millions of Americans.

James Bianco, head of Bianco Research in Chicago, thinks that the cash hoard points up another casualty of the crash: the willingness to take risks.
"People think too much of this stuff is manipulated," Bianco said of markets since 2008. "Their conclusion is 'It's not a fair game.'"

Not fooling anyone that doesn't want to be fooled...