Tuesday, November 22, 2011

The Warning

Have you ever heard of Brooksley Born?  Neither had I.

Neither did Alan Greenspan, Arthur Levitt, Larry Summers, or Robert Rubin, which is why they all testified to Congress to ignore Born's pleas to allow the Commodity Futures Trading Commission (CFTC) to regulate certain derivative financial instruments. Brooksley Born ran the CFTC when she attempted to regulate the multi-trillion dollar derivatives market - the same derivatives that helped trigger the 2008 financial meltdown.  Unfortunately, Alan Greenspan et. al. convinced Congress that the derivatives market would police itself just fine.

Clearly, they were wrong - and they admit as much on video.

The video on the subject made me think.  I'm a capitalist at heart, but
I'm also a big sports fan. I particularly love football.  Football has many rules.  Football games have a whole team of referees that ensure the players follow the rules and hand out penalties when the rules are broken.  Both the rules and the refs are there for the good of the game. To this day, the derivatives market has very few rules and no refs.

You can watch the fascinating 55 minute video produced by PBS, FRONTLINE: The Warning available for streaming on NetFlix.

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