Perry Glasser

Transparency & Deregulation

In Economics, Politics, Wall Street on October 10, 2008 at 1:05 pm

Expect the same financial advisors who once sold their expertise and accepted your assets to manage to be smiling like undertakers and shaking their heads that as a buyer of their services, you should have listened.
We bought their expertise, and when markets rise, they claim to be heroes. When markets sink, howver, they point at us for our ignorance.
Let’s be less ignorant.

TRANSPARENCY

Worshippers at the Holy Open Market like to use the word transparency. Finding this word in the mouth of Weasels and Bucanneers is a lot like finding a nail in your breakfast cereal. After initial revulsion, a Citizen asks: How did this get there?
When political Weasels cannot find a reason to educate American children to basic financial concepts, they leave us at the mercy of financial Buccaneers.
Worse, when Weasels, Wizards, and Buccaneers collaborate in designing an arcane vocabulary to cloud transparency, allegedly transparent markets are in fact con games. Blowing smoke is blowing smoke, and doing so deliberately is called “fraud.”
An open market requires buyers and sellers be equal parties. Either has to be able to walk away and say, “No deal.” Captive buyers are not members of a free market economy–they are its victims. When Weasels allow:

  • old age to be a time of terror by allowing what were private pensions to become 401k investment vehicles;
  • when Buccaneers are allowed to restructure and cancel what were solemn covenants between workers and corporations to improve profits;
  • when Buccaneers rake 500 and 1,00 times the compensation of line-workers;
  • when employment is the only means to obtain subsidized health insurance;
  • when healthcare is not a universal right;
  • when 23 percent of every healthcare dollar spent in America goes to non-providers called “insurance companies”;
  • when retirement vehicles that are allegedly conservative are managed by Buccaneers and Wizards who wrap that vehicle in rhetorical gobbledygook deliberately designed to obscure the vehicle’s true nature;
    Such a market is far from open. No amount of transparency will remedy that.

DEREGULATION

Weasels who philosophically embrace deregulation do so as a rhetorcial dodge. Dollar$ No BS translation: deregulation = The strong shall no longer protect the weak.
Proponents of deregulation whine that regulation limits (gasp!) profits: they do so while standing in the ruins of the American economy, an embarrassment to their teachers at Yale, Harvard and other leadership factories where History was taught.
Regulations were created  in response to bitter lessons. While times indeed change, no one has yet repealed the Business Cycle–Boom, Panic, Depression. Regulations were designed to smooth those cycles out–never to eliminate them. Wizards and Buccanners who dismantled the regulatory system to earn an extra buck have pushed the world economy over the brink.
Wizards engaged in inventing new financial vehicles are NOT engaged in financial innovation, but in brinksmanship. Their chief tool is faster than light computing; they are in and out of highly leveraged vehicles in minutes. Markets were created for human interaction, not for a war of algorithms.
Dollar$ No BS translation financial innovation = promoting a financial vehicle that purportedly does one thing but in fact does another. Thus, Citizens may be deceived and fleeced:

  • Citizens who conservatively save in a money market are dismayed to learn that the Buccaneer in charge has used the Citizens’s money for risky investments. The buck gets broke. The Citizen can’t send his kids to college. The Buccaneer retires to the Caymans
  • Citizens naively believing that the insurance industry is sleepy and safe learn after the fact that credit swaps are insurance on debt, but are called anything but “insurance” to avoid insurance regulations. Shepherds are unaffected; the rest of us are in a worlwide conflagration that will lead to political unrest, totalitarianism, fascism, and the abnegation of human rights.
  • Buccaneers who chafe at short selling regulations induce their Weasel colleagues to change the rules, the uptick rule dating from 1932 is banished, and in 2007 what was once a reasonable tool for hedging risk becomes the naked short, a light-speed computerized lever able to grind a company’s stock into the ground.
  • Weasels garnering votes push the American Dream by forcing Freddie and Fannie to make “subprime” loans, only for Citizens to later agree that “subprime” means “uncreditworthy” and that America itself has been mortgaged. Foreign governments holding American paper start to worry about repayment. The dollar plunges in value and worlwide credit dries up as banks horde cash. Even Georgie’s War on Shepherds seem imperiled.

What’s next? Well, the Chinese curse comes to mind: May you live in interesting times.

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