Among all the talk of a bail-out for failing financial institutions very few people appear to be focusing on the news that the Securities and Exchange Commission (SEC), the federal agency charged with regulating US financial markets, was a probably major contributor to the very collapses they now seek to reverse.
Since 1975 US markets have operated under "net capital" rules which require that broker-dealers, companies who trade on their own accounts as well as for clients, must value their tradable assets at market values and then apply a discount to account for the element of risk. They must also maintain a debt to net-capital ratio of 12 to 1, and issue warnings as they approach that value. The straightforward thinking is that this limits key institutions' exposure to risk, but of course the downside is that it also limits the amount of money they can make: doing trades at higher leverage means you can make (or lose) more money with the same amount of capital.
A former employee of the SEC alleges that in 2004 it allowed five companies to move to a much higher ratio, 30 or 40 to 1, and also to stop applying the risk discount. Not unnaturally this left those companies rather more seriously exposed if any of their debts defaulted, and we all know what's been happening with bonds based on dodgy mortgages lately. The five firms were Goldman Sachs, Morgan Stanley, Lehman Brothers, Merril Lynch and Bear Sterns. Oops. In case you have just arrived back from another planet I have italicized the names of the firms that no longer exist. Perhaps high-ratio trading isn't good business?
This should piss off a lot of people, including the poor saps whose pensions schemes have been in the hands of said institutions or dependent on their continued success. The American horror of socialism is laughable when you look at the mess capitalism has managed to create. An inefficient, outdated and centralized government bureaucracy could hardly do worse than this free-market cockup. It would be nice to see the millionaires who have created this mess by their incompetence serve some serious time in prison in view of the widespread misery they have caused. I somehow doubt, however, that this is going to happen.
Personally, I say that if you want to profit from capitalism then you should accept the downside risk and be prepared to take the losses when your greed blows up in your face. But then unlike many of the senators and congressmen currently scrambling to put things "right" with large injections of government funding (yes, ladies and gentlemen, our tax dollars in action) I don't have large holdings in stocks and bonds. So my major asset, the house I live in, will decline in value thanks to the greed of the people at the top, and the rich will stay rich at the expense of the poor and the middle classes.
Where are the revolutionaries when you need them?
According to the circus that opposes the Leader of the Opposition, it's all about power.
Jeremy Corbyn, they say, would not be able to command a sufficient parliamentary majority to form a government, and so he should be replaced. The levels of personal ambition betrayed (betrayal is an unavoidable stain on the circus) by the current Wilson leadership campaign are impressive, but it appears to me that all we Labour Party members are offered is empty promises of an overnight change. Switch your bank account in a day, switch your party leader as though he were a football manager after an unsuccessful season. Welcome to the twenty-first century realpolitik.
When a goal is difficult, people sometimes wryly observe that "you can't get there from here." I see no narrative in Owen Wilson's policies for how society will slowly be restructured to provide the fairer country that all Labour supporters aspire to. Rome wasn't built in a day, and the Labour Party must acknowledge that the journey back to government can only be gradual. The Conservatives successfully focused on people's “aspirations” in the last election but the aspirations to which they alluded were the venal desires of those who, when more becomes available, want it all for themselves. My kind of socialism wants to see the pot more equitably shared out, and is prepared to agree that those whose need is greater should get some priority.
Even ignoring that to get there from here we must, in the real world, pass through all points between, it seems to me that an even worse betrayal by Corbyn's opponents than that of their party is the way they are betraying the parliamentary process itself. By focusing solely on electability they implicitly suggest that the Opposition has no power. This ignores Jeremy Corbyn's most significant parliamentary success to date, which is that he has shifted the “Overton Window,” the range of acceptable political ideological debate, far more than most have realised in the last year.
Now we are finally governed by a Prime Minister whose personal integrity indicates (despite her draconian rule at the Home Office) that she might be amenable to moral argument, the value of Corbyn's achievement is of real potential to those whom the cruellest policies of the past six years have hit worst. Sadly, there is much repressive legislation to be repealed or replaced but thanks to the Leader of Her Majesty's Opposition, the Rt. Hon. Jeremy Corbyn, it is something that can legitimately be discussed.
Jeremy Corbyn has something that few other politicians do: the trust of a large number of people, many of them disadvantaged and formerly hopeless. For the Labour hierarchy to stab these new members in the back in the worst possible way, by denying their aspirations would be the kami kaze destruction of a disintegrating party. He may not yet be a fully effective leader of the Parliamentary Labour Party, but he carries hearts and minds with him in a way that hasn't been seen in a long time, and Labour will ignore that at their peril.
His opponents would betray the people of this country by waiting until they achieve a distant goal before allowing the poor to once again enter the promised land of secure existence. Corbyn's way offers them some hope for the first time in a long time. The Opposition's duty is to oppose, and that should be the first responsibility of today's Labour Party, not the pie in the sky of an election victory in four years.
Jeremy Corbyn, they say, would not be able to command a sufficient parliamentary majority to form a government, and so he should be replaced. The levels of personal ambition betrayed (betrayal is an unavoidable stain on the circus) by the current Wilson leadership campaign are impressive, but it appears to me that all we Labour Party members are offered is empty promises of an overnight change. Switch your bank account in a day, switch your party leader as though he were a football manager after an unsuccessful season. Welcome to the twenty-first century realpolitik.
When a goal is difficult, people sometimes wryly observe that "you can't get there from here." I see no narrative in Owen Wilson's policies for how society will slowly be restructured to provide the fairer country that all Labour supporters aspire to. Rome wasn't built in a day, and the Labour Party must acknowledge that the journey back to government can only be gradual. The Conservatives successfully focused on people's “aspirations” in the last election but the aspirations to which they alluded were the venal desires of those who, when more becomes available, want it all for themselves. My kind of socialism wants to see the pot more equitably shared out, and is prepared to agree that those whose need is greater should get some priority.
Even ignoring that to get there from here we must, in the real world, pass through all points between, it seems to me that an even worse betrayal by Corbyn's opponents than that of their party is the way they are betraying the parliamentary process itself. By focusing solely on electability they implicitly suggest that the Opposition has no power. This ignores Jeremy Corbyn's most significant parliamentary success to date, which is that he has shifted the “Overton Window,” the range of acceptable political ideological debate, far more than most have realised in the last year.
Now we are finally governed by a Prime Minister whose personal integrity indicates (despite her draconian rule at the Home Office) that she might be amenable to moral argument, the value of Corbyn's achievement is of real potential to those whom the cruellest policies of the past six years have hit worst. Sadly, there is much repressive legislation to be repealed or replaced but thanks to the Leader of Her Majesty's Opposition, the Rt. Hon. Jeremy Corbyn, it is something that can legitimately be discussed.
Jeremy Corbyn has something that few other politicians do: the trust of a large number of people, many of them disadvantaged and formerly hopeless. For the Labour hierarchy to stab these new members in the back in the worst possible way, by denying their aspirations would be the kami kaze destruction of a disintegrating party. He may not yet be a fully effective leader of the Parliamentary Labour Party, but he carries hearts and minds with him in a way that hasn't been seen in a long time, and Labour will ignore that at their peril.
His opponents would betray the people of this country by waiting until they achieve a distant goal before allowing the poor to once again enter the promised land of secure existence. Corbyn's way offers them some hope for the first time in a long time. The Opposition's duty is to oppose, and that should be the first responsibility of today's Labour Party, not the pie in the sky of an election victory in four years.
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