Quote:
| Originally Posted by brian eiland ...... a really good explaination (and in laymans terms) of what has lead us to our current economic crises, and where it might be leading us near-term and long-term. Well worth a listen....and scary when you think about it. |
Fresh Air from WHYY, April 3, 2008 · Perplexed by the U.S. economy? You're not alone. Law professor Michael Greenberger joins Fresh Air to explain the sub-prime mortgage crisis, credit defaults, the shaky future of other types of loans and what we can expect from the U.S. financial markets.
Greenberger is a professor at the University of Maryland School of Law and the director of the University's Center for Health and Homeland Security. [quote]
[rant off]
Full disclosure: I usually find NPR's take on business matters to be freighted with leftist agenda and liberally (ha!) sprinkled with errors of omission-of-fact.
Michael Greenberger, on the other hand, in the WHYY interview, was surprisingly evenhanded and offered up a very sucinct explanation of how credit-default swaps work, and their role in our current economic malaise.
[rant on]
Toward the end (39 minutes), though, the "Ethiopian-in-the-fuel-supply" (thank you, W.C. Fields) became apparent with Greenberger's answer to NPR's Terry Gross' question regarding what happened to all the "lost" moolah.
Why, some people made big money on those bets (the swaps), he said, as he went on to excoriate Goldman Sachs and other 'speculators'.
The money did not just disappear. The smart took from the stupid, and that is "bad" according to the perfessor.
Adam Smith is rolling in his grave. While there is talk about more government regulatory reforms coming, don't hold your breath...not in this election year, anyway.
By next year, The Markets, as Mr. Smith explained roughly two hundred years ago, will morph (sans regulatory changes) as the "losers" of these kinds of bets...will no longer wish to sit at that table. Of course, now that the world is no longer awash in liquidity, there will be less likelihood, desire, and/or need to make a buck with highly leveraged 'speculation'. Folks have wised up. Maybe.
Derivatives (remember Orange County over twenty years ago? No? May I interest you in some AAA-rated CDOs today, sir?) will shape-shift into some other financial instrument. Or not. They, like zombies in some grade B horror flick ("Attack of the Shadow Bankers!"), apparently refuse to die.
Free markets adjust. Investment in brick-and-mortar in the U.S. has gone, Joe DiMaggio, to be replaced by Gawd knows what new ideas Wall Street springs on us.
And, that is what p****s off the good perfesser.