Federal reserve banking system catastrophe is like...

Discussion in 'Economics' started by bellman, Oct 9, 2008.

  1. bellman

    bellman

    Enron.

    I abhor the use of metaphor, but for some people it is the only way they can communicate and grasp ideas. So for their sake alone, here goes.

    The current meltdown in our financial system is almost entirely parallel/similar to the meltdown of Enron.

    Similarity number 1: Greed is at the center of each. Our banking system is wreckless and ineffecient. There are a lot of people making millions of dollars, throwing lavish parties, executives drinking champagne, strippers, etc.

    Similarity number 2: A sense of eliteism. Enron's key players felt they were smarter than everyone else. Key players in the financial system from Paulson to the guy selling mortgages believe that they know something that the rest of the public does not. In each case, they believe it makes them special and worthy.

    Similarity number 3: Profit by manipulation of markets.

    Similarity number 4: Dependance of the public on the services rendered.

    Similarity number 5: An artificial playing ground. In the case of Enron they alone had access to the data and the physical commodity. In the case of the financial system, alone have access to the overnight loans, the term auction facilities, the bailout funds. And what's worse, they need not deal in any physical commodity.

    Similarity number 6: The cover up. In the case of enron, they blamed the government, poorly designed grids, etc. etc. In the case of the Fed, most of the blame has been placed on "irresponsible lending and borrowing" and the governments inability to regulate. No doubt these practices cause the overall market to flucuate, but in no way would it ever have caused as severe of a disruption to a sound and well designed, efficient financial system.

    Similarity number 7: The solution. People need to go to jail, there needs to be a massive transfer of control of our banking systems. We need to look at how the market works, how it is manipulated for profit, how it can run more efficiently. Not a single penny or minute needs to be wasted worrying about predatory lendors or bailing out Americans who can't pay their mortgage. In short, we need to better understand our money supply and control.