" No one understands these economic products"

[dixiegrrrrl]

Head of Blackstone Group, just said this, on C-Span 2.

He is saying no one..not Bernanke, Paulson, etc. has any clue what the financial markets were up to.

Worth listening to. Economic Forum. About 1/2 over now.

[elleng]

1. ENRON,

writ large.

[truedelphi]

4. The thing is, the Average person read about the Enron swindles with horror

While Wall Street used the Enron maneuvers as their playbook

What they have done is to Enron-ize our entire economy. So what if even after our 7.7 TRILLION dolalr BailOut antoehr 180 Trillion dollars of lost monies still sits on the Books,
waiting for Rubin and Geithner et al to BailOut all that too.

And the Big Boy financiers may say that they never ever saw any possiblities of destroying the Whole Wide World's economy, but they also told little old ladies and the pension manager of your pension fund that there was "No way in the world" that the money invested in SIV's and credit defaults could be lost.

I personally think that hanging these bastards and using the old time methods of drawing and quartering would be far too GOOD for msot of them.

[Triana]

2. Brooksley Born knew. n/t

[elleng]

6. And what have we heard about her, recently?

Where is she?

Now I'm getting angry! 'They' don't like Sheila Baer (?SP), fhlbb, either.

[SupplySideLiberal]

3. I don't think it's that hard to understand.

The variety and complexity of derivatives is mind-boggling, but the reason for the collapse is simple: too much leverage. Just as home borrowers took out mortgages they couldn't afford, the big financial institutions borrowed too much to fund their derivative positions. It's the same thing that happened when Long Term Capital collapsed.

[elleng]

7. Yes, the 'basic' principle isn't hard to understand;

the complexity is in the details.

[Warpy]

5. I did enough reading to get the basic idea of most of them

but the truth is that the only people who understood them completely were the crooks who created them. All the suckers at banks and brokerages heard was "projected payout of 6% per annum" which is a very good payout rate for any investment.

It was all a paper shuffling game, buying and selling for the sole purpose of pumping up fantasy numbers and hiding losses in dummy accounts.

That if collapsed is no surprise to any of us who did even a small amount of reading about what was going on in the rarefied air of the hedge fund asset manufacturing scam offices. It's no surprise to any of us who have been reading about massive abuses like predatory shorting and naked shorting.

The only surprise is that it lasted as long as it did.