Re: financial spiral of death



On Mon, 3 Dec 2007, Russell wrote:

On Dec 3, 3:20 am, morrisjc...@xxxxxxxxx wrote:
A derivatives insider chuckling.

http://articles.moneycentral.msn.com/Investing/SuperModels/AreWeHeade...

"he points a finger at three parties: regulators who stood by as U.S.
banks developed ingenious but dangerous ways of shifting trillions of
dollars of credit risk off their balance sheets and into the hands of
unsophisticated foreign investors; hedge and pension fund managers who
gorged on high-yield debt instruments they didn't understand; and
financial engineers who built towers of "securitized" debt with math
models that were fundamentally flawed."

The last point shouldn't surprise anyone since the meltdown
of Long-Term Capital Management. In the past I've mentioned
a book here about that, as well as _The Crisis of Global
Capitalism_ by Soros, and even _Fooled by Randomness_
and _The Black Swan_ by Taleb touch on the subject. If
I were teaching a course and a student turned in a project
based on such flawed assumptions, they'd get a D at best.
I suppose a few people have had the sense to take the
other side of the market against these modelers, and are
now making a killing. Taleb (or his firm, since the last I
heard he's gotten out of the active side of the business to
devote himself to his real passions) is probably one of them.
Too bad the idiots
^^^^^^

I'd like to propose that we seriously consider changing the way we make reference to these people. All along for many years I have lumped all these people into the category that I use the label _crooks_ for. Since reading that biography on the Napoleon family (and surmizing from that biography that Napoleon was responsible for causing far more trouble for
a lot of people than any benefit for people other than members of his immediate family), I used the word _dangerous_ to describe them. The term _parasite_ even seems tame since _pathogens_ exist that don't actually do "large" amounts of damage other than some form of "sickness."

I have made numerous references to commentary in criminology books that the dollar value of crime caused by people in the upper 0.1 to 1.0 percent of the socio-economic spectrum is comparable to the dollar value of all crime caused by the lower 99% and when (or if) people appreciate what this means and are willing to do something about it, then maybe our society will improve or at least maybe set up a police force to protect us from this upper 0.1-1.0 percent, or at least the component that "lives on" the rest of us.

The other problem are the people in high places that have the authority to make wars (you know: soldiers, guns, bang-bang pain, death, destruction stuff) that the rest of us, one way or the other, pay for with our money and our flesh and blood.


get to take the rest of the economy (e.g.
us) down with them when they get burned.

Cheers,
Russell

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