Aha! Searching for more confirmation of my theory that there’s an ongoing effort to white-wash the role played by hedge-funds/speculators in destabilizing the economy, I came across this intriguing passage at wiki, about the upcoming Oliver Stone movie, Wall Street: Money Never Sleeps, a reprise of his 1987 movie Wall Street:
“The New York Times reported that, as part of research for the film, Douglas and Stone had a dinner meeting with Samuel D. Waksal, the founder of the biopharmaceutical company ImClone Systems, who spent five years in federal prison for securities fraud.[42] They also stated that LaBeouf, along with Stone, discussed the financial collapse with multiple hedge fund managers.[42] Stone stated that, earlier in the summer he had taken LaBeouf to a cocktail party, organized by Nouriel Roubini, a New York University economics professor and chairman of a consulting firm who earned acclaim for predicting the financial crisis early. At the party Stone and LaBeouf discussed the financial collapse with Roubini and also
discussed hedge fund managers, who are clients of Roubini’s firm. Roubini stated that: “In this financial crisis it was the traditional banks and the investment banks that had a larger role in doing stupid and silly things than the hedge funds.”[42] Stone also stated that he had conversations with Jim Chanos, a “prominent” hedge fund manager who had urged him to focus less on hedge funds and more on the banking system, Chanos stated: “There was a much more important story, a bigger story, in what happened with the system.”[4]”
Wouldn’t you know it…
Of course, here at the MBP we don’t have a problem with the thesis that the investment banks behaved stupidly…and badly. We just have a problem with the accompanying non-sequitor – that the hedge-funds behaved any smarter or better.
A few made out like..er…bandits, true. But, it’s our theory, and we’re sticking to it, that many of the ones who did – especially the ones who’re getting a boost in the media – were part of the “inner circle” of government-connected banks that essentially ran this whole racket.
Chanos seems to have been part of that clique.
And Paulson too.
It’s not government versus banks. That’s the silly black-and-white debate created for mass consumption.
It’s more like some parts of the government +some banks + some speculators versus everyone else.
With the SEC (government), “captured” by some hedge-funds and banks, any regulatory change (whether it’s more reg. or less reg.) ends up serving the same set of masters. It’s heads-I -win- tails- you- lose for them….
Unless we can start seeing this for what it is and bypass ideological rigidity, we will never be able to prevent the system being gamed.
Or, to put it in terms of those formulae beloved of financial “masterminds” who think we rubes can’t see through this baloney:
It’s not G v. B.
It’s
(s)G+(s)B +(s)S v. EE, where ‘s’ is always a positive integer.
(Chuckle). I think I have a future as a “quant.”
Of course, all this is only the short-term fix. The long-term fix is the Federal Reserve.
But while we’re working on the illness, there’s no reason we can’t treat some of the symptoms correctly, as well.