Saturday, May 8, 2010

Casino Royale

Yep, that's the title they should use for the remake of Michael Douglas's sequel to the film Wall Street !  In this remake, the traders are suited up in loud checkerboard and bright red and light tan suits with wide ties and slicked back hair.  The women come to work in high black fishnet stockings and tight red satin bodysuits.  And the World Trade Center site just down the street from the trading floors is a vast pool with high-pressure jets spewing skyward every fifteen minutes.  The 'bankers' come and go in big black limos and spend their days behind one-way mirrored control rooms packed with young associates at computer terminals all day long, monitoring and shifting the odds. Vegas on the Hudson. High finance, 2010 style.

The equity, bond, and mortgage markets used to be the pride and joy of American capitalism.  The foundations of a free market, the place where business owners could go to finance their dreams and share their success with big shot shareholders and little old ladies in Dubuque. 

No more. All that's left is a gambler's paradise, and you and I will foot the bill the next time the house of cards collapses.  It's rigged.  It's a racket.  It's wrong.

Today's NYT story about the 'investigation' following this week's mini panic is sad and laughable.  We know the outcome of this, don't we?  The House always has the advantage, and the super-smart MBA's and MIT mathematicians who really should be doing something more productive with their lives have created a casino where they almost always prevail.  Even if the underlying trigger for the panic turns out to have been human error, the hair-trigger responsiveness of a computer-driven structure reminds me of the 1960's cold war novel Fail Safe, where the national security apparatus takes the country to the brink of inadvertent nuclear holocaust.  The algorithms driving this insanity are deeply, cleverly hidden from regulatory oversight.

Nah, this isn't drama.  this isn't the movies.  This is real and dangerous.  Will we have the courage to tightly regulate or dismantle this?  Doubtful......  

BobOnARoll is buying a new hollowed out mattress.

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