iNow's "FRONTLINE: The Warning" vid

[The Bear's Key]

Off to work, but I've jotted down some highlights in the vid. They're seeds for many great points of discussion, I believe.

 

Also, thanks to iNow for posting the link and twice making the effort for discussion. I'm posting as a new thread because I don't want to discuss the video itself, but rather many of the variables within that seem to help explain our political and suboptimal reality.

 

Of course a video doesn't have footnotes or inline citations, something I wish possible to make it easier to research and/or verify what's said.

 

I'll return to finish up on the rest. The material below's plenty good enough for now....

 

 

Referring to Alan Greenspan...

 

3:04

The man behind the curtain. The Wizard of Oz"

 

 

3:44

"Very few people wanted to take him on or challenge him, because he knew so much more than they did. And if he didn't, he certainly appeared to."

 

 

 

Referring to free marketers in the Clinton Administration...

 

 

7:47

[Clinton] "asked Robert Rubin to serve as assistant to the President for economic policy"

 

 

8:25

"At the White House, and as Treasury Secretary, Rubin found an unlikely ally. Clinton had asked Alan Greenspan to stay on."

 

"Bob Rubin and Alan Greenspan were very much in lockstep. They had very similar views on Wall Street. It boiled down to the less regulation the better."

 

8:48

"And Reuben populated the Clinton Administration with a network of free market true believers."

 

"It wasn't just Rubin and Greenspan who were these free market acolytes. That thinking pervaded the Treasury and the White House."

 

9:39

"Together, Greenspan Rubin and Summers formed their own pro-business, anti-regulation support group."

-- "The Committe to Save the World, according to the Time Magazine cover"

 

"These are the people we turn to at that moment. Who together, all three in a way, say 'Trust us'"

 

 

Referring to fraud indifference...

 

16:13

"[Greenspan] said something to the effect of...'We're never going to agree on fraud'...You probably think there should be rules against it....I think the market will figure it out...and take care of the fraudsters."

 

16:56

[*]"Greenspan didn't believe that fraud was something that needed to be enforced"

 

18:01

"[brooksley Born] starts to realize that there's this whole world out there of what are called 'over the counter derivatives', that are essentially unregulated....it's not even that they're unregulated, it's that the government doesn't even know what's going on"

 

18:29

"On Wall Street they described it as a black box. Only the parties involved in a deal knew what was happening."

 

18:48

"Derivatives; swaps -- basically bets between companies and banks laying off risk."

 

"Derivatives in essence are insurance policies that various players on Wall Street enter into to protect themselves from unforeseen calamities."

 

"It was a 27 trillion dollar market happening out of sight, inside a black box.

 

"...plenty of room for fraud."

 

 

Referring to a millions of $$ swindle...

 

19:56

 

"In 1993, Bankers Trust, one of the largest banks in the country at the time, had sold derivatives to Procter & Gamble."

 

"Procter & Gamble sued Bankers Trust, claiming that they had been sold products that they didn't really understand -- and that blew up in their face."

 

"Bankers Trust employees took advantage of the fact that derivatives were too complicated to understand."

 

"As part of the case, Procter & Gamble discovered secret audiotape recordings of telephone calls between Bankers Trust brokers."

 

"There was one employee who described the business as a wet dream. A Bankers Trust employee said 'we set 'em up'"

 

"They had taped phone calls from people inside Bankers Trust who were sort of chuckling, saying 'huh huh, these idiots really think that this is really in their best interest...huh, huh, it's not. We're probably going to end up cleaning their clocks on these contracts."

 

"It had all happened in secret."

 

 

Referring to secret threats...

 

21:24

 

"Looking inside Wall Street's black box was impossible for Born, or indeed any other government regulator."

 

"There was no record-keeping requirement imposed on participants in the market. There was no reporting. We had no information"

 

"There's no way really for the government or anyone else to know how many of these are out there, know how big a market it is, and know who owns them and who owes who money, because it's just a bunch of contracts in file cabinets in the lawyers offices of banks and hedge funds all over the world."

 

"Trillions of dollars, and the biggest banks in the country operating in secret. If something went terribly wrong, the high stakes derivatives market could take down the entire financial system."

 

"You have one big institution that fails, it can't pay its obligations, it forces somebody else into a dangerous territory of can't pay their obligations, pretty soon it's a falling domino effect through the economy."

 

 

Referring to a stacked deck...

 

26:03

 

"That puzzled me [born]. What was it that was in this market, that had to be hidden? Why did it have to be a completely dark market. So it made me very suspicious and troubled."

 

"Born's agency was legally independent. She reported to the President. Rubin had no authority over her."

 

"To stop her, he would call upon his allies who sat with him on a secretive council known as The President's Working Group."

 

"The President's Working Group was the most influential White House body on financial policy."

 

"It was a committee hand-picked by Bob Rubin."

 

"Larry Summers attended. So did Alan Greenspan. And the chairman of the SEC, Authur Levitt. By executive order, the head of the CFTC [brooksley Born] also attended."

 

"Rubin, Summers, and Greenspan had a great deal of faith in their own intellects. And, I think they were not welcoming of somebody who looked at the world different and was kind of abrasive."

[insane_alien]

what was wrong with that thread for posting this?

[The Bear's Key]

For ease of reference as the points are immediately viewable on entering the thread. The other got too cluttered with irrelevancy.

 

Also, I'm doing something different that what iNow perhaps had in mind. Just wanted to give him credit for introducing the video though.

[iNow]

My preference would be to follow the path you've taken, TBK, and merge this with the existing thread, while maybe a mod could delete some of the off-topic tripe in the other (including some of the things in my own OP). As it is, I've already been neg-repped and called a troll for the OP in the other (I posit that this action was taken by user ajb). I'd like such nonsense to stop, and have an actual conversation about this topic.

 

Your summation above seems to be an excellent jumping off point to do just that.

[bascule]

I find it interesting that even in 20/20 hindsight of this and the financial crisis, people still oppose more stringent regulation of these markets (derivatives and securities)

[jackson33]

The Bear's Key;

 

The Federal Reserve, buys contracts (mortgage notes) from 'Member Banks', as collateral for there loans, overnight to long term. None of this is on public record or are most transaction involving trillion of dollars on a WORLDWIDE BASIS'. ALL major financial institutions, by law are required to list 'assets' on a quarterly (Federal Reserve on a monthly) basis which includes investment, stocks (including derivatives), bonds, bullion, or others considered liquid, to satisfy requirements for emergencies, unusual withdrawals or some major devaluation of non liquid assets or in todays cases, large segments of unemployment, high loan default levels and so on...

 

 

On this, there have been 105 Banks, said to have gone under in the US, this year. NO BANK, has gone under, or lost values more than their assets, they simply fell below the perceived level of 'required level of liquid assets', another Bank, more than willing will assume their responsibilities. Now to compare this to 'Major Institutions', in September/October of 2008, which catered (do business) with hundreds to thousands of smaller Banks and Business operations, could possibly have created a chain of events, based on confidence, throughout the US and then the World, where they all do business. All indication, if the Paulson initiative, if followed through on could have prevented most of which has happened since.

 

In using the 'Share of Stock' comparison to a 'derivative'; As a share of Stock a derivative is bought/sold by whomever/whatever, based on their confidence on future market activity, literally betting on a higher market. All futures, from Oil to Copper, Gold to Stocks, and Derivatives are the same. Such trading in money markets (values by comparison of two currencies for instance, can be in excess of 2 (TWO) T$/day.

 

My argument with the 'Frontline Documentary' is itself was "irrelevant to the problems, either creating the Housing/Financial problems or it's persistent problems. To go a little deeper, Volcker, Greenspan and others in charge of the Federal Reserve or those involved in oversight (Congress), to a point were powerless, in determining the consumers/investors. Example of ignorance, is in the Bankers Trust, P&G transaction. No regulation could have protected P&G, from making a decision for investing their assets, just a the millions of folks owning GM shares over the past 20 years, while it dwindled down to -0- value. Example; Rubin, is/was anything but a Republican or Conservative but did and probably still does believe in 'Free Market Capitalism', which I believe at heart, so is/was Bill Clinton, the man (opposed to politician).

 

To summarize my opinion, all this post is; Without giving blame to any one person, one party, one administration, since 1965 their has been an increasingly advanced notion to increase the economy, qualifications for participants should be lowered, to stretch the values of the money supply beyond the actual values and most important the idea that under control these things could go on for an indefinite period (pyramid scheme), whether it be Social Security, Medicare/Medicaid, Welfare, Home Ownership or anything deemed politically advantageous.

 

For ease of reference as the points are immediately viewable on entering the thread. The other got too cluttered with irrelevancy.

 

Also, I'm doing something different that what iNow perhaps had in mind. Just wanted to give him credit for introducing the video though.[/Quote]

 

The other thread had not been given a chance to take on a direction. Only two post were made directly toward the opening post, which itself was mixed with emotions and content.

 

 

bascule quote;

I find it interesting that even in 20/20 hindsight of this and the financial crisis, people still oppose more stringent regulation of these markets (derivatives and securities)[/Quote]

 

Are you suggesting Government Regulations, in no way could be responsible for the current problems or any in history have not been. As in the current situation, a minority of those involved have created a problem for the majority, whether you blame government, the private sector of a combination of both. This current mentality that 'risk' is or should be free from financial loss is getting out of hand. I've been asked 10 times in the past year to join some class action suit for some stock that may have gone while I was holding.

[bascule]

Are you suggesting Government Regulations, in no way could be responsible for the current problems or any in history have not been.

 

Greenspan tried to move us towards a more deregulated system. The experiment was a failure.