26 May 2016

The three amigos.

[In Clyde Prestowitz’s 2010 The Betrayal of American Prosperity, he] notes how in 1989 and 1993, financial instruments that later played a central role in the meltdown of 2008–9 were exempted from government oversight. For instance, Greenspan was adamant about getting the government out of the way. “In fact, Greenspan largely halted the Fed’s active oversight of the banking industry.” Joined by Treasury Secretary Robert Rubin and his successor Lawrence Summers, “ the three mounted an aggressive campaign to halt any efforts to regulate trading of new derivative instruments.”

When measures to impose constraints on these risky trades were being considered, Greenspan, Rubin, and Summers pointedly blocked them. Also, when Brooksley Born, Chairwoman of the Commodity Futures Trading Commission attempted to do her job, Summers aggressively attacked her actions. Right on cue, Greenspan, Rubin and Arthur Levitt of the Securities and Exchange Commission pressured Congress to straightjacket Born.[1]

Even now, are toxic derivatives just unregulated?

You have to have a strong stomach to delve into the world of high finance. And good luck researching any of this to try to develop something more than a skin-deep understanding of our financial and monetary recklessness.

[1] "The Big Short: Film and Book." By Edmund Connelly, Ph. D., The Occidental Observer, 5/26/16 (emphasis added).


Joshua Sinistar said...

This is the Left's method of privatizing the Government. Its a massive wealth transfer from taxpayers to crooked Wall Street Hustlers to compensate them for the losses incurred by the private sector welfare program known as low income housing loan programs. Passed under Bush jr, the erstwhile "compassionate" conservative, they were greenlighted and put into operation during the Clinton Presidency to reduce costs associated with welfare reform due to unaffordable welfare costs on the Federal Budget. A massive wealth transfer funded by taxpayers to secretly fund unapproved off-budget welfare programs disguised as loans to untrustworthy and financially incapable poor minorities to buy subsidized housing from investors that remained unsold, and artificially create a Real Estate Boom that was actually a tax funded and taxpayer guaranteed Bubble to enrich Real Estate Tycoons and provide no cost to the government budget welfare housing programs that the taxpayers were expected to pay for due to an "emergency" without having to officially raise taxes which are always unpopular with suckers or voters.

Col. B. Bunny said...

I struggle to understand the barest facts of "financialization" of which Charles Hughes Smith writes. The movie "The Big Short" was a very good introduction to some of the broader themes. The reality you describe is very complex. Crony capitalism or crony socialism don't begin to explain all that's gone on. David Stockman writes with some clarity and I try to absorb what he says.