"Capitalism is deeply discredited," retired Vanguard Group founder John Bogle told Bloomberg TV this morning while plugging his latest book, called Enough. See Bogle on TV here.
"It will take a lot to bring capitalism back," Bogle said. "It was a system based on trusting and being trusted." That worked when the U.S. was "an ownership society," where most stock was owned by individuals, and credit was scarce.
But now, consumers and private investors are dependent on financial institutions -- from credit card lenders to investment funds -- which appeal to public "greed" and hopes of a wealthy lifestyle, but too often put more energy into collecting fees and profits than taking care of their customers, Bogle says.
"Managers would not be managing their own money the way they're managing their firms' money," Bogle complained. "The 30 largest shareholders in the Madoff hedge fund, 29 of them were financial institutions."
But Bogle didn't offer solutions beyond personal industry and frugality: He said he doesn't expect the government to let giant companies fail.
Posted: December 19, 2008 - 9:54 AM
Joseph N. DiStefano
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