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This is the semi-socialistic post-post-industrial economy colloquially known as “this mess”

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Note to commenters: Don’t respond to THIS PROVOCATIVE PIECE by James Lieber until you’ve read it all.

Lieber is a lawyer who writes books and articles on business and politics.

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7 Comments

  1. Why don’t our lawmakers remember the lesson from history that deregulation doesn’t work? Or did they remember and were duplicituous in creating this economic disaster that so far has benefited a few people immensley?
    It seems that every time the masses create real wealth through their hard work and are able to own a portion of it, the financial system has been deregulated, a few people become very much wealthier, and most people lose wealth.
    Did it really happen due to ignorance and by accident? I don’t think so. I agree with Black.
    We should freeze the assets of alleged perpetrators, prosecute, and recover what the government is able to. Why should their ill gotten gains be used to hire “the best white collar lawyers” to defend them? Let them have an overworked public prosecutor with twenty other clients like the members of working families who are accused.
    What can we do now? Probably just pressure Obama and our other lawmakers to 1) restore the regulations that have been removed that resulted in this crisis, 2) freeze assets of the alleged perpetrators, 3) agressively prosecute and request long sentences, 4) the government should recover what can be recovered at this point.

  2. I meant to say overworked public defender, not prosecutor in my previous comment. But that miss speak caused me to think it would be important for the public to finance Obama’s attorney general in order that the public will be able to aggressively prosecute these greedy and irresponsible CEO’s, CFO’s, and others who are responsible for this economic crisis.

  3. DingDong

    Read the article in full and there is a lot of technical information in the article that most people would not understand, myself included. This would be an article you have to have peer reviewed. In its entirety I agree but factually I think it is trying to show some sort of vast conspiracy. If you look at one of the comments from a poster named Nick, who seems to be pretty knowledgeable on subject you will see some glaring errors that are verifiable.

  4. Lieber used the term “true competitor.” Nick was incorrect. Do more research concerning credit derivatives mid 1990’s. Wikipedia is a good resource, but don’t rely on it if you need up to date info in all cases.

  5. swamprat

    Ding. Why did I know you would pick the one negative commenter out of 22. Commenter Nick is wrong to say Bloomberg has competitors. Blooming L.P. is a trading platform (computer and software) developed by Michael Bloomberg that trades derivatives. Reuters is a news organization that reports news. As does Bloomberg.
    This article tells it like it is. Derivatives can be described as a vast conspiracy. I have been reading warnings about these for 5 years. They are nothing more than alchemy. These financial types thought they could ‘create’ money. I admit they are very hard to understand, But as more people realize what they are they will see how the game is rigged. And now they want to get bailed out by the taxpayers. Derivatives are nuclear weapons which may destroy our financial system. The ones who have bought these need to take the loss. Not the taxpayers. Until these are written off we will not be out of the woods.
    This happens only once in a lifetime because the ones who had to live through the last depression were careful to not let it happen again. Now they are passing on. The new generation thinks they have found a new way to get rich.
    I believe the worst is yet to come.

  6. DingDong

    The reason I picked the comment out of the 22, is he just wasn’t making ridiculous superficial comments. It is good to make a point that something is bad but you need to do it with real facts. From what I know about derivatives, they don’t seem like a good thing. I think a lot of financial instruments need an overhaul. They are not the only ones that provide the type of software they provide.

  7. Rigged is for sure! Just suppose if insurance law permitted that I took out an insurance policy on your home, then I contracted with a capable arsonist to burn it down, or I knew such contract existed. I could take out one policy and make out just fine because I have no skin in the game or if I really wanted to make out like a bandit I could take out multiple policies and make 10x or more what your home is worth when arsonist fulfills his contractual duties. This is the derivative replication Lieber writes of.
    Reality is no different. Subprime ABX index aka credit default swap casino was the brainchild of a group on Wall Street traders for a consortium of investment banks and hedge funds who still retain at least 67% interest in MarkIt Group Ltd, who runs ABX and other MBS indexes, conveniently a private Brtish firm. Members of controlling consortium (I like the word cartel better) all have subsidiary mortgage servicing units. Every 6 months a new series of 20 REITs are chosen (I prefer the word targeted) to comprise ABX Index. Then, if not before these subsidiary mortgage servicers go to work manufacturing bogus mortgage defaults in a process known as mortgage servicing fraud. For more on servicing fraud see recent FTC settlement w/ Bear Stearns subsidiary EMC and trust me there are a lot more of these settlements out there. http://www.ftc.gov/opa/2008/09/emc.shtm
    The following Forbes piece also provides a clear picture of where it’s at:
    http://www.forbes.com/2007/08/06/croesus-chronicles-indexes-oped-cz_rl_0807croesus.html
    This is fraud an insider trading on a scale previously unknown and it it’s perpetrators are being rewarded by US government bailout. Here I prefer the word “complicity”.

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