One year on from the collapse of Lehman Brothers market watchers and political leaders alike are delighted that ordinary folk now understand collateralised debt obligations (CDOs) and other structured securities. There is a sense that, now that everybody understands the complexities of the market place, it is far less likely that maths geeks and rocket scientists will ever again be able secretly to develop and trade the toxic waste that brought down that financial behemoth.
It is widely accepted that banks will have to show greater accountability in the coming months and years. Congress is working through President Obama's overhaul of the regulatory system and in the UK, Gordon Brown is making noises about how cross he is that bankers are paying themselves large bonuses again. But the key to long term change in the running of the global financial system has inevitably to come from the ordinary voters, the taxpayers who will have to hold future political leaders to account, and through them, the banks as well. And for that to happen they have to be able to understand the nature of the products that those banks trade.
And so it is with this in mind that Prime Minister Brown has decided to authorise a new range of derivatives that mean something to ordinary people. He and Chancellor Darling will sign off the first wave of these in the coming months. They will include poker derivatives - after all everyone and his aunt does poker nowadays. They will also likely agree roulette derivatives - roulette being another hot home counties favorite; pawn shop derivatives - much in vogue nowadays, what with the recession; lottery derivatives - everyone loves a punt, and remember, it could be you; and, slightly more controversially, mortgaged-up-to-the-hilt derivatives - a personal favorite of the Prime Minister.
"Let me make myself clear: The era of bankers having all the best tunes is over." Said Gordon Brown today. "It is time for people to understand what many of us have understood for a long time: The financial markets are not going away. So if you cannot beat them you must indeed join them. And the best way to do that is for this government to spread plain, intelligible casino capitalism to the masses. So that is why I now offer you 'The People's Derivatives'."
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At least he's trying
ReplyDeleteyes, very trying
ReplyDeleteLeave Gordon Broon alone. At least he didn't make any money personally out of this meltdown.
ReplyDelete(friggin' jerk!)
Hello? Hey guys, remember me??
ReplyDeleteI invented junk bonds back in the 80s and that screwed things up real good.
Don't I get some credit for inventing crap investments?
How quickly you forget your past heroes...
I think that there was too much regulation
ReplyDeleteBrown will never shackle the city. It was the goose that laid the golden egg, and he knows that it will be again. In fact these banks can make money so quickly that it's possible that the 'aspirational classes' will be feeling optimistic again before the next election.
ReplyDeleteThe UK's financial system is hardly unregulated.
ReplyDeleteRead Anthony Evans in the Guardian today:
"The notion that the present financial system is "laissez-faire" is, of course, ludicrous. At present, we have a nationalised organisation that holds a state-granted monopoly on the issuance of currency."
I read the Evans article. The guy's an asshole - he thinks that we should legalise insider trading!!!
ReplyDeleteI sometimes wonder why people bother.
ReplyDeleteWe all know that people like Brown / Darling will make positive noises for a while, then do nothing constructive and in ten years time (after the next bubble) we'll be here again.
You should have listened to Darling on World at One today. He couldn't even admit that spending cuts were on the way, and he skirted totally around the issue of bankers bonuses.
ReplyDeleteThese guys are utterly useless
Trying to get an answer out of Brown or Darling is like trying to nail jelly to a wall
ReplyDeleteAs we all know, the UK will gradually come out of the recession and the global economy will start to improve. It'll happen regardless of which Gov. is in power. Governments do not control the global economy. Although we know that Brown would love to get the kudos
ReplyDeleteVince Cable should be the next Chancellor, we all know that
ReplyDeleteI blame Thatcher - all this deregulation started with her
ReplyDeleteHave we ever really had a truly 'free market'? I think not. Most industries are stitched up by big corporates. Barriers to entry are massive.
ReplyDeleteThat isn't a free market
I wonder whatever happened to all those maths geeks and rocket scientists.
ReplyDeleteDid they find gainful employment elsewhere or are they still lurking in the corners of trading floors thinking up new derivatives?
Goddammit! If only CDOs were around when I was the main attraction.
ReplyDeleteI could have cleaned up
A lot of the maths geeks have been kept on to help clear up the mess I understand...
ReplyDeleteBrown is evidently looking for quick fixes.
ReplyDeleteNothing fixes quicker than a dodgy outfit fixer
If only cluster bombs were around when I was the main attraction... I could have cleaned up
ReplyDeleteBoss, when you were the main attraction clusterfucks were your speciality
ReplyDeleteMany of the 'guaranteed' products that people have been buying from their banks and building societies over the years have been based on complex derivatives that people do not understand.
ReplyDeleteSo the derivatives malaise has already spread further than you imagine and many ordinary people have already been burnt