Here's the way it goes: one group of greedy, inventive mothers cooks up a whole bunch of ways to make money off of their intricate knowledge of the system and how it operates. Some of those ways are even legal under the rules, which were cleverly manipulated ahead of time. Others were not legal, but were not punished until it became fashionable to do so. This group does its thing until it can no longer do so because the system can sustain rampant, illogical stupidity for only so long. It then collapses under its own weight. The guys who run the game see it coming early and get out with huge paydays, going to the mattresses until it's safe to come out and start the game over again.
Then there's a second group. They're the ones that wander into the smoking McMansion when almost burned down. They look for signs of arson. They look for clues about how the conflagration started. They try to figure out new safety regulations that will make it unlikely for such a blaze ever to occur again. This group is somewhat understaffed. It lacks resources. And there are a host of speculators waiting for them to finish their duties so they can build a new McMansion on the same spot. Eventually, their bosses call and ask them to wrap things up so that business can get rolling again. And so they do.
Today, we see representatives of both groups hard at work, each in their own cities.
In Washington, we have banking lobbyists making sure that any financial reform does not hamper their industry's attempt to get the derivatives business rolling again. It's a $22 billion business, they say, and crucial to the well-being of Wall Street, which, in turn, is good for the nation.
One thing is for sure. Wacky financial instruments are a key part of the high risk play necessary to create the kind of heat that produces seven and eight-figure compensation for those who sell them. It's also necessary to kick start the next cycle of boom and bust, where all the long and short hitters make their serious money. You know who gets squeezed in that play, but it doesn't matter. That first group is good. They will win.
In Brussels, on the other hand, you have a bunch of grim-faced fire fighters trying to staunch the flow of green from Greece and the other nations in the Eurozone who suddenly woke up after their bad party. It's going to cost a trillion dollars. And as soon as that's paid, you can bet there will be a moment of reflection... and then the guys from our first group will be back speaking whatever language they do, working to make sure that their bosses can start the cycle all over again without being hampered by the party poopers on their side of the Atlantic.
Washington. Brussels. Do you think we could set up some kind of hot-line between the two? Maybe the good guys in the two cities should be communicating a little bit better with each other.
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