Wednesday, July 29, 2009

Stop me before I hedge again....

The origins of the Catastrophe of 08 are fairly well understood now, but, like addicts who wake up from last night's revelry with the morning vow of 'never again', the folks who created the conditions for the wild ride we have just been through are at it again. And, this time, as in the past, aided and abetted by government officials who are of the Street, by the Street, and for the Street. I am not hopeful about near-term prospects for a fix.

The Paul Wilmott op-ed piece in today's Times reminds us that we are living through Terminator 4: Gotterdamerung. In this treatment, the Machines triumph over civilization, not by crushing the Rebellion but by picking our pockets, in microseconds before we even have a chance to pull our pants up. Wilmott--whose piece was a bit disingenuous since he is the guru of the dweebs who financially engineered us into this mess-- alerts us to nightmarish market volatilities ahead if we don't figure out a way to regulate this.

The missing piece of this scenario, however, is ably supplied by Matt Taibbi, whose reporting (yes! journalism!) in Rolling Stone, describes how the government supplied the liquidity---in the hundreds of billions, perhaps trillions--so that the Goldmans and the Citis could resume trading and profiting handsomely from this activity (witness Q2 results).

Is it fair to suggest that the government needs to intervene and shut this down or at the very least to explain to We The People how the trading activity with such enormous payoff for Wall Street contributes to the economic good or hastens the prospects for economic recovery for the rest of us.

Recovering addicts know that the definition of insanity is repeating unhealthy behaviors and expecting a different outcome. Why don't the Obamites 'get it' ??

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