The End of Wall Street's Boom - National Business News - Portfolio.com
What a fascinating read. It really exposes the wilful ignorance, greed and blind investor faith that led to the current crisis. All the way from the first risk shifting IPO of an investment house and the first mortgage derivative in the 80s, to the shit of shit of shit complexity of CDOs of CDOs of subprime of today. How rating agencies were essentially bribed by fat fees to neglect their fundamental investigative duties by using financial models that were obvious fiction. How through devious measures subprime dealers turned the bets that they would crash and burn into yet another means to slip AAA rated shit down the throats of ignorant pension funds. The creation of a financial doomsday machine so complex that virtually no one understood it, if only because they were unwilling and knowing they were profiting from suicide, but still giving them plausible deniability. It was a "I just followed my orders and got rich" disaster that would have made any fascist proud and a lot of dead war criminals.
But we all know that justice will be fleeting. A few will be made examples of, to be sure. But once the government bailouts sink into place, the cycle will simply begin again unless regulation is put into place. Not some draconian measures to be sure, but simply enough to ensure multi-billion dollar companies will actually do what they are supposed to, if not for our interests but for their own survival. Make the rating agency ratings actually mean something, for one. Require registration of all exotic derivatives, like a patent in a sense, so that they may be vetted for their economic sanity. Provide central clearinghouses for all significant markets, so that at least someone has a clue as to what's actually going on. Just a few sanity checks really, and good enough to last a few decades before someone inevitably finds a loophole to screw us all again with.
To be sure though, if America lets this happen to them again, I will be on the profiting side. Perhaps I, being more astute, would spend the money better.