Reading between the lines here, parasites such as Goldman, also Prime dealers of the FEd, may have knowledge of their book.

Why not ‘punish’ him for ‘causing the downfall of Lehman?’ It was ALL his fault don’t you know.

These bankers are a heinous breed, and it wouldn’t shock mee in the least if they were out to destroy those that they perceive were crossing them.

As sad as it is, 2 bankers in Britain were either killed or commit suicide recently. When $$$ is involved things can get terribly ugly when people lose their shirt.

The depravity of man is on display.

http://www.amazon.com/Fooling-Some-People-All-Time/dp/0470073942

It points out the fundamental need to free the republic from the stranglehold that finance capital has held the country in for the past generation, starting with the bankruptcy of NYC in 1975, aka The Banker’s Coup. It was this event that presaged the dominance of the neoliberal regime and serial credit crises to come. Now, as a result of their infinite greed and arrogance, we will see a Final Offensive of structural readjustment, privatization – already announced in Thursday’s New York Times, in an article buried in the back of the Metro section announcing that Governor Patterson is exploring the sale of state assests – and widespread immiseration.

While Marx’s prescriptive powers left much to be desired, his powers of description – namely, the inherent tendency of capitalism to generate crisis – remain prescient.

As Willem Buiter pointed out in an extended exposition in his recent Jackson Hole paper, excessive leverage is playing a critical role in this entire debacle.

I have no objection to free market players capitalizing on the mistakes of others using clever strategies described in this piece.

What I DO object to however is their use of HYPERleverage to obtain their aims.

Because of the very large sums involved here, such highly leveraged plays only serve to amplify the degree to which we will overshoot the fair and reasonable clearing price for risk on the downside.

Such an overshoot is in itself destabilizing.

When Buiter and Bernanke agree on something, it seems likely that it is worth taking under advisement. Both of them view a fundamental cause of the mispricing of risk to be excessive leverage.

As Yves seemed to implicitly point out yesterday (and please forgive me if this is a mischaracterization of her view) when she raised legitimate concerns about the methodology used in regulating tightly coupled systems, we need relatively stable markets in order to commence with the massive price discovery to follow.

The use of hyperleveraging is inconsistent with the sound policy objective of the repricing of risk within a relatively liquid and stable process.

Matt Dubuque
mdubuque@yahoo.com

Inflate to infinity and die anyway in real time.