The Triumph of Wall Street: "Nothing has been fixed. Nothing has been changed ...."

[Better Believe It]

Deregulation and the Triumph of Wall Street
Written by Garrett Johnson
September 11, 2009

One year removed from a catastrophic, global, economic meltdown, and 26 months removed from the start of the credit crisis, our political establishment is either unwilling or unable to reform the system and punish the perpetrators of this debacle. The situation is so far beyond the pale that it makes one wonder if another catastrophe is even avoidable.

In fact the proposed changes are extremely mild in comparison to the deregulations that preceded them in the previous decades. But Wall Street simply can't wait to return to the speculative frenzy of the recent credit bubble, and now that most of the risk has been offloaded onto the American taxpayer, Good Times Are Here Again.

Companies are selling exotic financial products similar to those that felled markets and the world economy last fall. And banks' appetite for risk has grown: The nation's top five banks collectively stood to lose more than $1 billion on an average day in the second quarter of 2009 should their trading bets go sour, a record level. Now, the federal government is locked in a kind of regulatory limbo. U.S. officials say they are committed to preventing history from repeating and have pleaded for fresh powers to do so. But today, they have few new options -- excepting another bailout -- should financial markets seize up again or a large institution totter. "There's no fundamental change in the way the banks are run or regulated," said Peter J. Solomon, a former Lehman vice chairman who runs an eponymous investment bank in New York. "There's just fewer of them."

Perhaps the best indicator of Wall Street's revived exuberance is its continued pursuit of exotic financial engineering. The market for credit derivatives, widely blamed for helping destabilize markets, remains vast....Total return swaps -- a type of derivative that lost favor during the crisis -- are among the instruments regaining popularity, bankers and investors say....Even collateralized debt obligations, perhaps the biggest money-loser in Wall Street history, are staging a comeback of sorts.

So after trillions of bailouts and guarantees at the taxpayer expense, banks have used that taxpayer money to thwart any reform legislation, while returning to risky investment practices at an even greater level than ever. And when things blow up again, we can expect an even larger bailout than before. Or another Great Depression. Or both.

Nothing has been fixed. Nothing has been changed, because we gave money to the people that caused the problems and demanded nothing in return.

Please read the complete article at:

http://www.bitsofnews.com/content/view/10878/

[polichick]

1. The NYTimes ran a story today called "A Year After a Cataclysm, Little Change on Wall St."

I'd post a link but every time I visit that site I get a virus warning ~ instead I get the blog on my Kindle.

[polichick]

2. And there's this: "Obama to urge financial regulatory reform"

http://www.reuters.com/article/politicsNews/idUSTRE58A3Z720090911

Hope it gets Congress back on track.

[Jackpine Radical]

3. The economic footing of the world is very unstable. There is every likelihood

that these psychopaths will trigger a new crash, a much more serious one this time. One that will rend the social fabric in unimaginable ways. Consider the concepts of money and ownership for example. It is ultimately only by convention, established by common agreement and enforced by police forces, that anyone owns anything--and likewise, it is only by common acceptance that money has value. Those little electronic markers have no intrinsic value; you cannot eat them, you cannot wear them, you cannot even bury them in the back yard as we used to bury gold in hard times. If something happens to their "supply--" for example, if they get wiped out by the trillions, or the world is flooded by trillions more of them (we are talking about nothing more than electronically stored numbers here, remember), then people may stop taking them in exchange for useful things like food, clothing, and 9mm pistol ammunition. Another huge crash could destroy public confidence in the validity and utility of the various social fictions by which our daily lives are organized: fictions involving principles such as private ownership and the convertibility of money into the things we need to sustain life.

Then what?

Then anarchy. The revolution will have just happened, in ways that nobody anticipated, and to social depths more profound than anybody has thought about. And it will be very ugly.

[Doctor_J]

4. Hopefully these psychopaths will be the first casualities when

the shit finally hits the fan

[Jackpine Radical]

13. Yes, one can hope.

[girl gone mad]

15. It rarely works that way, unfortunately.

It's usually the innocent who get caught in the crossfire.

[AdHocSolver]

14. The aim of the "psychopaths" is to bring on a new depression.

It was the collapse of the German economy in the 1920's that destabilized the politics of that country which eventually enabled the takeover of the German government by the Nazis.

The loss of manufacturing jobs, increased debt to foreign banks, rising prices for imports, and the German government's slashing of civil service jobs and reduction in entitlements, such as pension payments, to stabilize the economy brought about a fracture in German politics which enabled the rise of the fascists to power.


For an interesting (and chilling) introduction to the economic and political conditions in the Weimar Republic which led to the rise of the Nazis to power, check out the Wikipedia entry.


http://en.wikipedia.org/wiki/Weimar_republic

[Jackpine Radical]

16. Disaster capitalism is not new.

The fly in the ointment this time may be that the impending disaster is more than an economic one. It may well entail the breakdown of more than they plan on.

[AdHocSolver]

5. The metaphor that best describes the current financial industry is a plague of locusts.

Like a plague of locusts that consumes all edible plant life, the financial locusts are consuming all the funds that could be used to enable legitimate business activity.

The U.S. has become a country without law and order in the financial sector of the economy. The government has relinquished its duty to police the banking business for the good of the country. Instead of reinstating Glass-Steagall and the other New Deal banking regulations that were thrown out during the last 15 years, the government has caved into extortion demands of the bankers to provide them with bailout money. These bailouts will not prevent total economic collapse. They merely put collapse off for a few months while the bank thieves withdraw the profits of their crooked schemes.

[Better Believe It]

6. And this by Ralph Nader

Rolling the Dice Again
by Ralph Nader

http://www.commondreams.org/view/2009/09/12-5

[Better Believe It]

7. Wall Street Pursues Profit in Bundles of Life Insurance

Wall Street Pursues Profit in Bundles of Life Insurance
By JENNY ANDERSON
September 5, 2009

After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

.... Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated.

The idea is still in the planning stages. But already “our phones have been ringing off the hook with inquiries,” says Kathleen Tillwitz, a senior vice president at DBRS, which gives risk ratings to investments and is reviewing nine proposals for life-insurance securitizations from private investors and financial firms, including Credit Suisse.

“We’re hoping to get a herd stampeding after the first offering,” said one investment banker not authorized to speak to the news media.

Critics of life settlements believe “this defeats the idea of what life insurance is supposed to be,” said Steven Weisbart, senior vice president and chief economist for the Insurance Information Institute, a trade group. “It’s not an investment product, a gambling product.”

Undeterred, Wall Street is racing ahead for a simple reason: With $26 trillion of life insurance policies in force in the United States, the market could be huge.

Read the complete article at:

http://www.nytimes.com/2009/09/06/business/06insurance.html?_r=1&scp=1&sq=%E2%80%98life%20settlements&st=cse

[OwnedByFerrets]

8. But, but, but we put Madoff in prison...didnt that fix everything?

:sarcasm:

[JeffR]

9. Good stuff. K & R.

Thanks for sharing this.

[bvar22]

10. Reced ...back up to +4

Remember......
These are the SAME people who are going to "regulate" Health Insurance for us.
:rofl:

[ProSense]

11. Prosecutors Are Poised to Impanel AIG Grand Jury

here

[debbierlus]

12. Just like Obama now wants to do with the health insurance companies...it is disgusting