this month, we welcome your views and comments on the following piece

The problem is structural. Financial markets are esssentially markets for debt. As the size of bank balance sheets, pool of global savings, and corporate profits grows, so does the accompanying debt -- surpluses on the balance sheets of creditors, whether banks, thrifty workers, or profitable corporations, always coincide with debits on the side of borrowers like governments, consumers, and corporations.

As the size of global capital markets continues to rise well beyond the size of global goods markets. Part of the reason for this is that tax codes are quite regressive and income flows for 40 years have been directed at the wealthiest, but much of it has to do with the very nature of capitalism itself -- a system designed to facilitate the accumulation of capital ends up with systemic crises of the sorts we have been living through with increasing frequency and destructrive power.

An economic system that is about capital accumulation ends up creating vast pools of savings and credit that grow much faster than the capacity of the real economy (i.e. the goods and labor markets) to service these debts. Its as if capital snuffs out all the life on which it ultimately has to depend to continue to grow. Recall whats happened to Walmart -- its profits have been falling because its customers have lost jobs, experienced declining real wages, and are choked with debt. This is why I'm arguing that financial markets have to shrink in size and that means the elimination of vast pools of savings and financial capital through bank failures, bankruptcies, and government default -- when the system has cleaned itself out and financial markets are resized, we may begin re-thinking our tax codes to focus on bolstering employment, consumption and constructing an economic system that is not entirely driven by the vicissitudes of financial markets whose very size makes these crises endemic."

Not everyone can be above average. If the market averages a certain growth, then half will be below and half above that average by definition and since its so difficult to beat the average consistently with a strategy that others can quickly copy, the solution, as you note, is often trickery and short cuts that yield short term stock price rises, but all many and probably most of these short cuts that boost stock prices also destroy the real value of companies. For instance spending money on stock buy backs rather than research and development (a chronic problem that may permanently impair a nation's ability to compete over the long term) or firing the very workers who add value to a company because shareholders always love it when management downsizes or being bought out by another firm eventhough these mergers usually make little sense and often confer no real value in business terms -- still the shareholders are happy and stock prices rise.