Derivatives

English: Wall Street sign on Wall Street

English: Wall Street sign on Wall Street (Photo credit: Wikipedia)

The abuse of unregulated derivatives by Wall Street caused the Great Recession. That is the conclusion reached in Republic, Lost, How Money Corrupts Congress–and a Plan to Stop It by Lawrence Lessig. The following quotation is the simple analogy he uses to explain what happened. The regulation of derivatives is compared to laws regulating automobile highway speeds.

“A speed limit that applies to black cars only will not only incentivize the sale of colorful vehicles, it will also be a boon to the paint departments of auto body shops everywhere. That’s the story of Wall Street in the 2000s. While some portion of the market for derivatives was no doubt driven by a genuine meed for the particular flexibility of a derivative, a huge proportion was simply black cars being painted red. The winners in this new market were the drivers of those freshly painted cars, and the firms that had done the paint jobs (aka Wall Street). The losers were–surprise, surprise–the rest of us.”

The derivatives in question were backed by US mortgages and rated AAA by Standard and Poor and others. Derivatives were exempt from regulation by act of Congress as urged by Alan Greenspan and others. Financial instruments still regulated by law were recast as derivatives to escape regulation. And without the discipline of regulation, Wall Street took on excessive risk. And it came tumbling down in 2007-8 birthing the Great Recession.

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ODS

English: President Barack Obama discusses his ...

English: President Barack Obama discusses his plan for health care reform in a speech delivered to a joint session of the 111th United States Congress on September 9, 2009. (Photo credit: Wikipedia)

ODS (Obama Derangement Syndrome) is alive and thriving in today’s GOP. Kimberley Strassel writing in the Wall Street Journal criticized President Obama for not going  to Congress before striking Libya and is now criticizing him for seeking approval from Congress before striking Syria. In his book, The Center Holds, Obama and his Enemies, Jonathan Alter blames ODS at the highest levels in the 2012 Romney campaign for Romney’s loss. Essentially the Romney campaign didn’t see the handwriting on the wall.

One nation under God?

Francis Galton, the English eugenicist who wro...

Francis Galton, the English eugenicist who wrote extensively on the relation between intelligence and social class (Photo credit: Wikipedia)

Is the US a Christian nation? Many on the Right insist that we are a Christian nation because most of the Founding Fathers were Christians and the founding documents refer to God. However, true Christians are judged by God as to  how well they treat the poor among them. Using that standard, we are becoming a less Christian nation by the day and hour. GOP members of Congress are working to shred the safety net, permitting the poor and less advantaged among our citizens to fall by the wayside. Their program is called social Darwinism and it’s been tried before, both in England and here in the US. The government will guarantee an embryo’s right to life, but from the moment of the birth, the newborn is on his/her own. Nothing is guaranteed thereafter. If you succeed, it is by your efforts alone and you get to keep all the rewards. If you fail, it’s your own fault and government will not help, unless you employ lobbyists to help write the laws. We don’t want failures in our midst, contributing their genes to the gene pool. The country is stronger and better off without them. The sooner they disappear the better.

Insanity

079 Capitol Hill United States Congress 1993

079 Capitol Hill United States Congress 1993 (Photo credit: David Holt London)

Insanity is doing something over and over and expecting different results. The GOP in Congress have voted 40 times to repeal the Affordable Care act (Obamacare) and failed every time. Collectively the GOP in the House of Representatives are insane.

Please see Hannity.

Job #1

079 Capitol Hill United States Congress 1993

079 Capitol Hill United States Congress 1993 (Photo credit: David Holt London)

Jobs are job #1 for the GOP in Congress. What they mean by that, but don’t say, is preserving their jobs in Congress is job #1. And to do that their strategy is to oppose everything that the President proposes and is their job #2.