Some of those interviewed, who evaded questions or gave completely dodgy answers, looked pretty stupid. Yet of course none of these guys, really, is stupid. Thus, the only remaining question is why some of these guys aren't being prosecuted for fraud -- because if they were on the stand and being questioned by a good prosecutor, they would sound just as stupid (and corrupt) there as they do in this film.
So it would seem, as never before, that the White House should hire a special prosecutor. Ferguson's movie, which President Obama and his economic team really should watch -" but won't -" will hopefully be followed by a sequel: "The Perp Walk."
Well we can daydream, can't we?
Our new Wall Street government. And who ends up holding the bag?
What is the biggest threat to the world economy in the coming years? For some, it is global imbalances (deficits in some countries and surpluses in others). Others might say that the biggest threat consists of the currency wars that are on the horizon, or the bubbles in real estate, information technology and the Internet. Still others will tell you that unemployment can be a threat to the social welfare of communities and can topple governments.
Although you can name several other problems of today's economy, I doubt derivatives in financial markets would be a very common answer to this question, despite the fact that regulating the financial markets was allegedly one of the top priorities of the Obama campaign. Why not a common answer? Because the risky casino world of derivatives is the best kept secret of the financiers, who will continue to make hundreds of billions in profits from it (at our expense) as long as it continues to be unregulated and unmonitored by the government and the Internet.
Explanatory note: A derivative is a security whose price is dependent upon or is derived from one or more underlying asset prices. It is just a contract, does not have any value and its price fluctuates depending on the asset it relies on. Since the system is highly unregulated, nobody knows how big this market is; however, estimates say it is 20 times the size of the world's gross domestic product (GDP). (Remember when Iceland's banking system was hit by the crisis, the assets of banks were 10 times the GDP of the country). So, to the banksters the financial system looks like a giant casino where bets (contracts) are made on just about anything you can imagine and it is called insurance (remember AIG) or collateralized debt obligation (CDO) or swaps -- you name it. They are all rated AAA by the credit rating agencies and purchased by retirement funds. These derivatives were at the heart of the recent turmoil and caused a $20 trillion loss in welfare due to the crisis.
Wall Street banksters are the dominant players in this rarified market/casino, and they've already made hundreds of billions of dollars in it. And then many of their institutions -" the casino losers -- were proved insolvent and collapsed during the recent financial crisis. Their leverage ratios were more than 30:1. In other words, with each dollar in their reserves, they held (and many still hold) a portfolio of $30 of derivatives and other securitized contracts. Therefore, a 3% decline in the value of a portfolio makes these financial institutions go bankrupt, whereupon they have to be bailed out, if not by TARP or something like it, then by the Fed, which will, if necessary, simply create the bailout money out of thin air. With these leverage ratios, after a major decline in many real estate assets (e.g. mortgage-based securities), some, like Lehman Brothers, did indeed go bankrupt, and some were bought by other institutions and/or rescued with government assistance, such as Goldman Sachs and Merrill Lynch.
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