Ammunition for the Crash

So all the bankers and hedge fund managers are sitting around trying to figure out how to measure risk.  Then this guy comes along and IDs the Credit Default Swap market as a proxy for real correlation of risk.  BOOM, the CDS market takes off because now everything can be aggregated into these pools of risk, and everyone is making money off of it, so everyone else has to do it to keep up, despite the fact that there's really no underlying behind CDSs.  And everything is great...everyone is making money. 

 

One problem.  Everyone ignored that it's all inherent upon housing values going up. 

 

I have two rules in life:

1) Things will always get done if you set a firm deadline.  They may not get done perfectly, but they will get done.

2) Greedy fuckers will always look for routes, loopholes, and methods around the SOPs insomuch as that they are driven by and rewarded by making money. 

 

This happened with Enron, WorldCom, Savings & Loans back in the 80s, and it's happening now with Lehman Bros., AIG, Citi, B of A and the like.  Thus, not only is regulation of financial markets advisable, it's necessary, and I'm not sure there can be too much of it.  Because as sure as the sun will come up tomorrow, greedy fuckers will sacrifice long-term stability for shorter-term windfalls. 

 

This came up with neighbors the other night and I'm bringing it up again here.  Can you imagine going having a medical condition and, instead of seeking out the advice of a doctor, you sought out the advice of a lawyer?  Hey, there are smart lawyers, but if I'm fucked up, I want someone with knowledge of the human body to fix me. 

 

Well imagine a place that, when confronted with major challenges such as global climate change or a collapsing banking and financial industry, didn't seek the advice of scientists or economists, but rather sought the advice of politicians -- and repeated it like parrots.  Well that place is the United States. 

 

People keep spouting off the "irresponsibility" of the stimulus package, failing to realize that building $300billion in equipment, driving it to a dock and then pushing it in the ocean is far more beneficial to the economy than just another round of plain old tax cuts, or the laissez faire approach of just letting banks and businesses die off.  Yes, there will be deficit spending, yes the bill on the future will go up.  Here's the problem - it's going up NO MATTER WHAT!!  The sooner we get the economy back on track, the better off we all are - our generation and the future generations. 

 

Why we continue to let ideology trump science in these debates escapes me.  It astounds me and it frightens the piss out of me too.