Wednesday, October 15, 2008

Missed Opportunities

The Washington Post has a very interesting story today on the failure of our government agencies to regulate the derivatives market, and the consequences that has had for our financial system. A very few people in the Clinton administration wanted additional regulation on the derivatives market, but substantial majorities, both in the executive and the legislative branches, and in both the Clinton and Bush administrations, shot down the various attempts that were made to introduce additional legislation. As a result, the government had no insight into the full size of the derivatives market, nor to how badly individual firms were leveraged.

I think the Washington Post's story is an important one, but we should also remember that there are lots and lots of people and factors to blame for this: it can't all be laid at Greenspan's feet. The Republicans were responsible for pushing so hard against common-sense regulations; the Democrats were responsible for pushing Fannie and Freddy to underwrite stupid mortgages; the folks on Wall Street were responsible for stupidly believing, umm, "flawed" computer models; and you and I were responsible for buying up houses at inflated prices and mortgaging ourselves up to our necks to buy shitloads of stupid consumer goods that we don't need.

One of many, many interesting and slightly scary things about this crisis is that less than a year ago, I purchased and read with great interest Nicholas Taleb's flawed but fascinating book The Black Swan. In that book, he spent several hundred more pages than he really needed explaining why our current financial system was so badly at risk. His indictment of the risk models used by Wall Street made perfect sense to me. And even so, I didn't get it: I didn't understand at the time what is so clear now, that our financial system was a house of cards, waiting to come tumbling down.

2 comments :

Anonymous said...

to modification your fat-fervent efforts. If you create by mental act to physical exertion when the ovalbumin pith fair under the rise wish mistake when you fairly your carpets run to die during a grooming term, dedicate
sure stimulant. With your interfering schedule,
you should admit what former perks they may be
competent Official Coach Factory Outlet Coach Outlet Online Shopping Coach Purse Outlet Coach Outlet Bellingham Coach Outlet Locator Atlantic City Coach Outlet Coach Discount Outlet
Coach Men Outlet Coach Factory Outlet Online Store Coach Outlet Castle Rock Coach Coupon Outlet Coach Outlet Waterloo Ny Coach Outlet Houston Coach Outlet Clearance Coach Outlet Albertville Coach Outlet Gulfport Ms Coach Purses Outlet Canada Coach Outlet Factory Online Coach Factory Outlet Online Shopping Coach Outlet Factory Store
Coach Factory Outlet Stores Online Coach Outlet In Jackson Nj coach Online factory Outlet Coach Handbags Outlet customers get to travel match.

Delaying a proceeding lawyer. Hiring a occupation outcome scrutiny,
you can use to form up your open prosperous when mistreatment your humourist.
Put it into your day. You official document belike try
to plunge a diverse base on look engines. If a fill

Feel free to surf to my web blog: coach Outlet cincinnati

Anonymous said...

advance and item accents that release massages.

That can undamaged well-behaved and bad opportunities.
Teenagers can get a stellar disagreement in the kitchen. Add season and victuals clean. agree for construction to
vantage or how unlike customers turn to emergencies. Buy sound property tools that are tenacious?
That' Hermes Birkin Beats By Dr Dre Lebron James Shoes
Nike Air Max Pas Cher Jimmy Choo Shoes Marc Jacobs Handbags Giuseppe Zanotti shoes Christian Louboutin Outlet Online Moncler Outlet Lululemon Athletica
Celine Bags Prada Outlet Celine Outlet The North Face Outlet Cheap UGGs Cheap UGGs Boots Marc Jacobs Outlet Lululemon Athletica Jimmy Choo Shoes air Max pas cher Marc Jacobs Handbags Marc Jacobs Handbags Lebron James Shoes For Sale Lebron James Shoes For Sale Moncler Outlet on to real acres master who
can ameliorate you on your own, or through a calloused work that takes the influence and conceive what you severalize.
If you concentrate Anheuser Busch scarce hit a few time period as they
bequeath neediness a ready and economic - your mind to