Wednesday 9 May 2012

Born Again To Be Free

As a long time male chauvinist wild boar sometimes I can only grunt and admit that testerone does not always rule OK.  There are occasions when it might be sensible to listen and accept without much fuss if any.

Especially, if it might be a matter of survival or avoiding of catastrophe.

On the PBS Channel (Sky 166) a couple of nights ago I picked up a documentary called “The Warning”, a “Frontline” item about how the recent Great Crash happened and last night watched it.

Essentially, it dealt with the role of the over the counter market in derivatives, the risks entailed and the wilful refusal of all those brilliant blokes in Washington DC, Wall Street and London financial management and control to either manage or control.

The programme centred on Brooksley Born, Wikipedia listed, a lady lawyer with a long record of formidable experience:

In looking at the derivatives market and the need for information and safeguards she got it right.  In her role as Chairperson of the Commodity Futures Trading Commission in Washington DC she attempted to put in place the requirements usual in most financial sectors.

Her view was that a major failure in this market could pose a systemic risk that could cause extensive economic and financial damage and be a threat to the future of the USA.

The failure and bail out in 1998 of Long Term Capital Management (LCTM) seemed to confirm her fears and the need for a degree of regulation and analysis of what was happening in these markets.  Accordingly, she put forward proposals.

She was roundly denounced and dismissed by all the blokes around the President Summers, Geithner, Greenspan and Reuben as a power seeking troublemaker.  Greenspan is even alleged to say more or less that fraud was something that free unregulated markets could take care of it.

So back in London ten years later, when the Queen asked the question about why no experts failed to spot the coming crash and was given a load of verbal garbage at LSE about problems of prediction it was simply not true.

Moreover when those in Washington DC, Wall Street, London, the Bank of England and the politicians go on about how it was not really possible to see that trouble was impending that is also verbal garbage.

Because she was ignored the risks increased, systemic failure occurred and the USA has probably lost its status as the central major power in the world with a future that is increasingly uncertain and dangerous.

The simple fact is that the blokes in charge were hell bent on riding an insane boom built on a financial sector that was totally unregulated, secret and not policed in any way.  They and too many of their friends cum lobbyists were doing too well out of it.

It is still going on to a great extent and the lady is saying we need to watch out.  All I can do is grunt an agreement.

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