Two snippets from the financial industry


Yes, of course, we all know that the banks and the bankers are the Great Big Bad Boogiemen. It's purely their greed, their bonuses, their (cont. pg 94)...

So two interesting little snippets about the financial markets. The first is that everyone is saying that we need more regulation. More bureaucrats, the traditional solution to every problem. However, let's just have a quick look at what bureaucrats did do with the power that they did have.

The report is by the SEC's Office of the Inspector General (OIG) Case No. OIG-526 "Investigation of the SEC’s Response to Concerns Regarding Robert Allen Stanford’s Alleged Ponzi Scheme."

It's a damning report all right which is why it's been slipped out at the same time as the Goldman case. Essentially, despite the fact that they did have the power to close Stanford down, despite the fact that several people identified (in their opinion of course, this is still "alleged") it as a Ponzi scheme, despite that several parts of the bureaucracy tried to do something about it, nothing happened. It's not exactly the most convincing case for us all being saved by bureaucrats in the future, is it?

Which brings us to that Goldman case. The essence of which, in many people's opinion at least, is that Goldman set up a deal to fail. And that this is very naughty indeed, selling something you know is going to crater in value makes you a Vampire Squid.


Anyway, if the principle here is that a large complex financial institution should not service issuers that seem certain to default, California should just declare bankruptcy today.

For it does seem near inevitable that there will be, at the very least, a restructuring of California's debt, if not a full blown default and possibly even an attempt at repudiation. Therefore everyone aiding the selling of California's debt to the public is guilty of the same offence as Goldman's, no? Selling something they know is going to crater in value shortly?

And as for those organising the current Greek bond sales, there's no hope for them at all. Guilty, all of them, must be. For there's not even a celluloid rat's chance in Hell that they are going to be paid off at anything near par value.

I suppose there is one let out here. When people lie to us on behalf of Governments it is somehow different: but I'm not sure that's a world we'd really like all that much, is it?