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Bruce
It seems like looking at a drunken teenage driver that has driven a sports car into a ditch, and saying that the solution is to give them a 4-by-4 so that if they drive into a ditch they can keep driving.

I think that the problem is one of appropriately reconnecting the political to the economy.  Your analogy illustrates the problem when you use a drunken teenage driver as the protagonist. It was not drunken teenagers that got us into this mess.  It was sober captains of finance that did.  They may be better analogized as pirates masquerading as investment bankers, regulators and real estate brokers.

If what they did is not illegal, it should be.  But I find it inconceivable that many laws were not broken.  The problem has been political: a lack of will to enforce laws on some of the most powerful individuals in our society.  (That will may be emerging in the form of rage amongst the general population.)  

This lack of will was, IMHO, partly enabled by the presence in our population of a large number of traditionalists who see  business and political leaders in the context of strong fathers.  Calvinists will always tend to defer to the wealthy.  To them the fact that these folks are wealthy is a justification of their claims of authority, per se.  Finding ways to reduce the incidence of that mindset amongst the next generation will be the best insurance against a recurrence of this type of crisis.  With a substantial  majority of people who function as self aware adults rather than as manipulable children such shenanigans would me more difficult to sustain.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Sep 23rd, 2008 at 04:15:12 PM EST
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Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Sep 23rd, 2008 at 04:19:42 PM EST
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Fucking brilliant.

Better than any television I've seen since June.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Sep 23rd, 2008 at 04:40:45 PM EST
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... very much of what they did was illegal ... that is, what they did that directly led the finance sector far beyond the bounds of financial prudence. Teaching Money and Banking at the upper division Undergraduate level is a long walk through a series of steps removing the regulatory limits on behaving stupidly with other people's money.

Now, the argument for each deregulatory step was that the people doing the finance knew more about what would work and what wouldn't work than the regulatory authorities, but starting from the 1950's, through to the Fed getting permission to take garbage as the debt instrument for a 3-month repo loan, its been a fifty year slide downhill into "do what you want, make a million, if you go broke, its your own damn fault".

And the reason the regulations were in place was because we know how financial systems like that work. Under the pressure of competition, financial firms that do not "keep up with the Joneses" get squeezed out of the market, so its abandon prudence or abandon market share, and then once financial fragility is in place, something interrupts the money train, and a Banking Panic is set off.

It used to be illegal to do the stuff that put the bread and butter home mortgage and small business 90-day finance of the wage bill business of the commercial banking system at risk ... but that interfered with maximizing profit in go go times, and so they changed those laws, one by one by one, starting under Eisenhower from before I was born.

Now, once the Fed started lending with 3-month repos on assets that were overvalued at 85 percent of face value rather than undervalued ... by then there was clearly a capitalization crisis in place, and so people desperate to avoid things going bad before they could get out with their golden parachute might have cut corners. But I would not be surprised if most of the damage was done adhering to the letter of the law that has had its spirit completely forgotten decades ago.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Sep 23rd, 2008 at 11:46:31 PM EST
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I agree about the baleful effects of deregulation. It proponents would now be adorning the ends of long sharp poles in other worlds and times equivalent to this.  But, amazingly, given all the evil and stupidity that can legally be done, it appears that Fanny, Freddy and AIG all may well involve accounting fraud.  Roaring greed impales itself in its attempt to get just a little more!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 24th, 2008 at 12:58:49 AM EST
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... activity engaged in by those who find that their institution is under water and are trying to get back to solvency before "anybody finds out" ...

... that provides enough scapegoats to allow the systematic policy that put those firms under water in perfectly legal ways to escape unscathed.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Sep 24th, 2008 at 09:09:34 AM EST
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We have to drive a stake through both the perpetrators and the policies.  If we let the perps off, they will be emboldened to begin anew to subvert any reasonable regulations so as to get their cons going again.  Discredit the policy and philosophy.  Prosecute and destroy financially all that can be convicted of fraud.  Firmly establish the connection between the deregulatory philosophy and fraudulent behavior.  Drive this home to the public.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 24th, 2008 at 10:28:19 PM EST
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... of right wing monetarist fairy tales and historical lies, such as the video in this diary?


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Oct 4th, 2008 at 11:36:04 AM EST
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