A Quick Overview of the Insanity—or at least a slice of it

Brooksley Born, centerpoint of the Frontline documentary The Warning, from my previous blog, is a hero in the spirit of Barbara Lee—and about as well-known. Here’s an excerpt from Born’s interview:

[The economic collapse] happened because there was no oversight of a very, very big, dynamic [a nice way of putting it], growing market. Market participants don’t look out for the public interest. Traditionally, government has had to protect the public interest by overseeing the marketplace and keeping the extreme behavior under some check.

We had no regulation. No federal or state public official had any idea what was going on in those markets, so enormous leverage was permitted, enormous borrowing. There was also little or no capital being put up as collateral for the transactions. All the players in the marketplace were participants and counterparties to one another’s contracts. This market had gotten to be over $680 trillion in notional value as of June 2008 when it topped up. I think that was the peak. And that is an enormous market. That’s more than 10 times the gross national product of all the countries in the world.

Born’s full interview is here.

Buddy, can you spare a dime?

Lots of love,

Pete

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One Response to “A Quick Overview of the Insanity—or at least a slice of it”

  1. [...] from Brooksley Born (whose fascinating and stunning revelations I wrote about before, here and here), who was the honest and real public-servant head of the Commodity Futures Trading Commission, [...]

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