Bets & Debts - Market Money "Phones Home" by Louis Evan Palmer
Obvious obligations have been brazenly neglected: bond agencies have suddenly discovered that the ratings they gave to bond packages containing subprime mortgages were misleading, maybe even criminally erroneous; complex misunderstood derivatives funds have been allowed to operate and even grow by regulators and banks; hedge funds have been permitted to grow and expand and disrupt the market. All of the forgoing in the pursuit of obscene profits and zero oversight.
What is the disguising of subprime mortgages except fraud? It is a form of money laundering where one hides bad debt in with the good, divides it up and spreads it around so it can't be found, and then turns that risky debt into AAA debt and sells it globally. It was never about spreading the risk around, it was always about hiding the risk, adulterating good debt with bad and making millions before the scheme crashed as it must.
What is the cancerous growth of hedge funds and derivatives anything other than greed triumphant and out-of-control speculation?
The regulation and oversight of financial institutions is woefully inadequate. We don't have the required expertise in place or the political will. We need much more control of financial instruments especially those that constitute the creation of credit. We need to implement tax-based controls on the movement of money and credit and strict regulations to limit and civilize speculation. To quote Richard C. Cook: we need the "recognition of credit as a public utility, part of the societal commons, not the private playground of the financiers.." There is good speculation and there is bad (most) speculation! It is suicidal for societies to allow rampant "bad" speculation and its associated accoutrements to reign supreme. Boom and bust is the inevitable result where the short boom is for the few and the long bust is for the rest.
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Copyright 2007 Louis Evan Palmer lives in Ontario Canada. His short stories have appeared in numerous publications.
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