Monday, October 6, 2008

60 Minutes on the Shadow Banking System

1 comment:

  1. Came across your vid of 60 min while surfing in an attempt to get a rudimentay understanding of the financial crisis. Listening to it brought many things into focus I think. Is it possible this whole thing comes down to the single word difference in naming them Credit Default SWAPs as opposed to Credit Default INSURANCE? Insurance being subject to regulation and as such identical "CDI"(as opposed to CDS)would not have been deemed by regulators as sufficiently reserved and thus disallowed. And if it does come down to the naming of the instrument what does that say about those regulators that allowed the difference. They had to have known the "effect" was to create an insurance product even if not specifically called such. That decision then brings me to the differences as I see it between Liberal(progressive) thought and conservative thinkers. Am I wrong that one major difference is that conervatives(think supreme court) don't take into account (either by design or other reason i don't comprehend) the "effect" of a law. So that conservative thinkers would think the regulators did nothing wrong in not considering the "effect" of naming it a SWAP and not what it was in effect INSURANCE. Which brings me to a really wierd and discomforting conclusion. These agencies(the government)is so hands off in not considering "effect" that they effectively determine the governments role. Could this hands off Modus operandi be the primary reason FEMA (an agency, the government) was no where to be seen immediately before and after hurricane Katrina? It wasn't the federal governments role to help. It was a state problem?