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Monday, May 10, 2010

Conservatives Agree Derivatives Dangerous... So Get on Board with Regulation!

I've noted previously that we really need to reform the derivatives market. Unregulated derivatives trading helped get us into the current recession. Even arch-conservative blogger John Walker agrees that unregulated derivatives are dangerous. Walker cites this article from the Washington Times (you know, the conservative Moonie paper) that refers to derivatives as "the fiscal equivalent of a weapon of mass destruction" and chides the "generously lubricated lobbyists for the unrestricted, unsupervised derivatives markets [who] tell congressional committees and government regulators to butt out."

Of course, Walker's ideological blinders are screwed on so tightly that he doesn't actually call for reform; he just uses the article to reinforce non-sequiturally his delusion that President Barack Obama is a lying communist. Never mind that President Obama is advocating derivatives reform. Never mind that Congressional Dems are pushing for derivatives reform harder than Walker's GOP.

I can't help wondering if Mr. Walker would rather see financial reform fail and the whole economy collapse again, just so he could fling more insults at the President. Sigh.

Shake off those blinders—support the President's call for regulating derivatives!


  1. That's your answer for everything, "more regulations!" Mean while the SEC is watching porn 8 hours a day during the "financial crisis." Oh yeah, those regulators did great job catching Bernie Madoff only after his scheme failed.

    And if the Federal Reserve just had MORE power to regulate the banks they could of averted the hole thing......yeah right. They didn't enforce the regs that were already on the books.

    Here is some regulations for ya, Get Government out of the mortage business, the car industry, the banking industry, the health care industry, student loans, ag...... etc. etc. etc.

  2. Yawn. Stop screaming at me: it was the text John Walker posted from the conservative Washington Times that decried the "unrestricted, unsupervised derivatives markets."

    I don't consider more regulations the "answer for everything." But when it comes to financial "weapons of mass destruction" (again, conservative Washington Times's language, not mine) well, golly, a rule or two sure seem like a reasonable idea.

    On your last sentence: the fact that a hammer won't unplug my toilet, start my car, or bake bread does not negate the fact that a hammer will drive a nail. Recalling the SAT: hammer:regulations::nail:derivatives.

  3. When all you have is a hammer everything looks like a nail.

  4. Ah, yes, trying to win by reductio ad truism.

    Even if all I had was a hammer (and I have and advocate many more tools), that would not change the fact that nails are nails.

  5. Cory, why is it when a few items need to be surgically removed or changed, these bills like healthcare and banking try to overhaul the entire system? That has never made sense to me. If the goal is to improve what we have, congress has the power to regulate those areas that need closer scrutiny. Big money gambling like derivatives, futures and other financial products require someone to lose big in order for someone else to win big. If they need to be reined in, why not simply make those products illegal or tweak them? It does seem like a sledge hammer is being used on so many issues rather than a surgical knife (no reference to Blake Curd). Sweeping change is not what people expected. Few were looking for the boat to turn 180-degrees, but most wanted a course correction.

  6. Rod, let's see: subprime mortgages, predatory lending, derivatives, monkey business at Goldman Sachs, general economic collapse... and you're talking in metaphors about surgery and sledge hammers?

    Reforming the banking system (and the health care system) is no small matter. But whatever the broader systemic issues, are we agreeing with the Washington Times (and my original point) that derivatives need regulation?

  7. The talking points that are associated with this bill is that Wall Street has acted like a casino and must be reformed! Casinos run better than Wall Street and they do not accept credit. Try to go into an Indian casino and ask for $400 in chips while laying down $10.

    Wall Street knows that the elected federal officials will buy their bad investments. This bill could be very efficient and to the point...no more bailouts, period.


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