[tw]

Wacko Republican trying to have an informed discussion? Hardly. Instead is the sniping from caves – complete with a denial of the problem and zero solutions.

We know corruption in the finance industry is widespread. Directly traceable to a philosophy encouraged by a wacko political agenda. "The purpose of a company is profits." So we all suffer the consequences ten (ie AIG, Enron) and thirty (GM) years later. And then blame anybody but wacko extremists who wanted it? More sniping from their caves.

One of the greatest frauds were derivatives. To reap profits in this money game, the fraudsters must hide it in complex (hundreds of pages) contracts and in secret bi-lateral deals (CDOs, SIVs). And then pervert the accounting since, as one executive once told me (after drinking too much beer), "He makes the spread sheets say what they have to say." After all, only profit are important (and the resulting K Street brides).

The problems Redux has accurately identified were obvious even with Long Term Capital Management. Some ten years ago when wacko extremist Republicans were actively subverting the regulations even back then. Instead we encouraged even more corruption - along with the back room K Street corruption that made so much of it possible. K Street deals greased the wheels for any Congressman whose philosophy was, "Reagan proved that deficits don't matter."

Number one and most essential to undoing this disaster - part of a solution that will take at least ten years: derivatives must be traded on open markets. Essential so that Enrong accounting cannot continue - economic clamity not hidden in secret derivatives. Only then will counter-parties really know who is and who is not fiscally stable. Absolutely necessary so that another liquidity crisis does not occur when money will (and it is coming probably starting first quarter next year) get tighter.

The world is worth somewhere between $7trillion and $8trillion dollars. Takes assets (ie homes). Bundle those mortgages into mortgage backed securities. Then declare those mortgages as another asset (corrupt accounting). Automatically, the economy is richer. Then bundle those new assets into another derivative - SIV (special investment vehicles) cloaked in massive (unreadable) contracts. Then declare that an asset on manipulated spread sheets (ie Enron accounting that is still legal). Then insure those contracts with CDOs. And relabel that insurance as 'not insurance' (thanks to Republican congress subversion of regulation); as another asset. All this made possible by wacko extremist attacks on regulators.

IOW a world worth maybe $7.5 trillion now has $604 trillion new wealth created by derivatives. Money games openly encouraged by those who fear regulation. The world still has only $7 some trillion in actual things. But the finance industry has reaped massive profits by inventing assets. Using spread sheet games to claim the world is worth another $604 trillion. Notice the numbers what wacko extremists never provide when sniping from caves.

Wackos said this was good. Said we should not reign in fiscal prostitution. After all, perversion (SIVs, CDOs, etc) is a business that should not be regulated even after LTCM proved otherwise. Resulting campaign contributions to both Democrats and mostly to Republicans were too large. Wackos from both parties told their worshippers what to parrot from their caves.

The one industry that is historically most corrupt is the finance industry. Bankers are nothing more than sophisticated tellers. Why should the teller make more money than those who actually produce things? Finance never produces useful products. Finance has only one purpose - a servant to those who actually make America great. To provide liquidity and economic stability so that finance markets do not corrupt the creation and production of innovations.

First subvert the mortgage industry. Then blame the customers who bought the products. Then dump the entire mess only anyone but the finance people – who in turn take massive bonuses. And from the caves, “This is good”.

Many American industries need little regulation. History has repeatedly identified the finance industry needing most regulation. Finance people are productive when they are paid less than worker in other industries. After all, bankers and stock brokers are nothing more than better trained tellers and salesmen.

Which industries need least regulation? Ones in which the product is more important. “The purpose of a company is its products. To service the customer – not top management.” Which industries advance mankind, make America economically powerful, raise the American standard of living, and create jobs? This nation’s most responsible industries that provide products; that do not play finance games (as GM did). Companies and industries that need the least regulation also work for the customer and therefore advance America.

A responsible finance industry means stock brokers outperform the market. But that means they work for the customer; not maximize profits with finance games and salesman myths. Exactly why the finance industry needs heavy regulation and the transparency created by open markets. Exactly why international standards (opposed by political extremists) such as Basel 1 and Basel 2 were so important. Exactly why business school graduates (Wagoner, Skilling, Allen, Nardelli, Fiorina, Naser, Akers, Ford, etc) subvert America for their own benefit. Then blame everything or foreigners so that we will ignore their “purpose of a company is profits” corruption.

Who are some of America’s greatest assets? Immigrants. And so extremists deny any company TARP money if they hire H1B immigrants – the same employees that the Silicon Valley most needs. But then extremist want TARP to be a profit center; not advance America.

Redux has identified where problems lay. And has offered viable solutions.

Details are subject to scrutiny. But the bottom line – this economic meltdown is directly traceable to American wackos who said, “the purpose of a company is profits”. Extremists with no solutions are the same who cheered Harvey Pitts as he subverted the SEC – as only extremists wanted. Subvert regulations to make Maddof possible. And who now take cheap shots at regulation necessary to make LTCM, Enron, the CA energy crisis, and a thirty to one debt to equity ratio impossible. My god. Suddenly investment banks must also meet Basel 2? Extremists called that foreigners trying to subvert America!

From LTCM management even a decade ago – derivatives must be traded on open markets. Essential for transparency to keep markets stable. So that markets do not again freeze – which is still possible if we do not fix the problem before paying back that $700 billion. Yes, we will pay back the $700 billion that was borrowed from where – with interest? Before that happens, we must regulate and impose transparency on those created this mess. Extremists don’t like that. It says they were wrong. It says "Deficits do matter." Which is why extremists can only snipe from their caves and offer no solutions.