Reply #117: Very cool place you've got here at DU, al bupp. [View All]

[mark7sys]

Wonderful to find a group of people who can discuss such things. America isn't quite as bad off as I had thought.

“it was the basic entrepreneurial and capitalistic nature of our society an the financial sector itself that led people to actually invent and trade mortgage-backed securities. I'm not sure this can be easily legislated against ...”

Well, I'm afraid that if it can't be legislated against, we're all doomed. But it is, I agree, difficult. There is a constant cat-and-mouse game of regulation and evasion. If credit default swaps had been properly deemed in the first instance to be insurance policies and regulated as such (with at least a minimum of what could be considered rational capital reserve requirements), then the AIG cataclysm – in the drastic form which nearly took us all into a black hole – would not have been possible.

“... and certainly doesn't fit the typical description of a Machiavellian conspiracy.”

Well, to the best of my ability to make things out, the FDA is run by the industry which the FDA is supposed to be regulating … and financial sector “regulation” appears to work about the same way (although the Bernard Madoff scandal demonstrates that mere basic competency within regulatory agencies is also a critical factor). If I didn't call it “a Machiavellian conspiracy”, I would at least call it a case of putting the foxes in charge of the hen house. (Is there really much difference?)


BTW, just read your journal post from 22Oct08. Bravo!