Hello again, dear readers. Permit me to call your attention to the most important idea that nobody ever heard of... "data zealots" and their incapacity to see reality for all the facts in the way:
http://www.nytimes.com/2010/09/25/opinion/25herbert.html?th&emc=th
While reading the article, I was reminded of the intriguing story of Brooksley Born, the head of a little-known regulatory agency who fought in vain for the increased oversight of derivatives sales during the Bill Clinton administration. She was smacked down by then-arrogant and all-knowing Alan Greenspan with Tim Geithner and Larry Summers, who convinced a puzzled congress that regulating the complex instruments would be disastrous. Ten years (nearly to the day) after Born's Commodity Futures Trading Commission was stripped of its regulatory powers, frightened bankers met secretly in a dark corner of Washington to get their heads around the unraveling of black box derivative-fueled fiscal meltdown that crushed AIG and Lehman, and plunged global financial markets to the brink of disaster. Greenspan since admitted seeing the 'flaw' in his Ayn Randian libertarian-utopian economic model and admits now that regulation should have been implemented, while Geithner and Summers are joined at the hip in a position of leadership -- for now -- within President Obama's team of economic advisors, this time combating other ex-Wall Streeters-turned-lobbyists who will do anything to prevent regulation of the same reviving derivatives market that would have brought down the house without unprecedented Fed, government, and taxpayer intervention.
Watch the Frontline piece "The Warning" for an excellent synopsis of Brooksley Born's unheeded warning-become-prophesy:
http://www.pbs.org/wgbh/pages/frontline/warning/view/
It blows my mind to think it; it burns my mouth to say it... but we ARE going to go through it all over again. Details may be different, but we can definitely expect continuing danger from the shadow markets in the form of endlessly repeating calamities attributed to this regulatory gap. This time there will be no way to minimize the damage or do any meaningful triage after the fact. No biggie, though, the world will keep turning. Mother Earth needs a break from us anyway.
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