I watched The Warning on PBS the other night.
By focusing on Brooksley Born and framing her as a truth-teller being scapegoated, the filmmakers portrayed her stand on derivatives in a Quixotic light. It’s as if, perhaps in the interest of fairness and accuracy in reporting, that the makers felt they may have a responsibility to portray that these specious ‘side bets’ known as derivatives could have some viability.
Let us be clear: these ‘instruments’ absolutely don’t. They can’t- except perhaps in the short-term, as in a you haven’t realized that apologetic man who bumped into you just a few seconds earlier has your wallet kind of way. The filmmakers in my humble opinion didn’t make this clear. Wall Street financial geniuses patted themselves on the back after they figured out yet again how to fleece investors by conjuring something out of nothing. And then, as is their wont, lever it up.
Yet the fact that it is merely a handful of billionaire bankers with flagrant and obvious conflicts-of-interest who constituted the Presidential Working Group on Financial Markets (“PWG”) doesn’t even get its due mention.
That was the real story. Right there. Look at that picture with Summers, Rubin, and Greenspan. The palace coup that captured the American government is on display for all to see, right out in the open. How could this be missed? Maybe that sounds a bit dramatic but this is government-sponsored PBS we are talking about here, so c’mon.
And now they’re baaaaaaaack.
Perhaps the filmmakers could have taken a safer route by fleshing this with 30 seconds to describe how and why having the same people regulate themselves is just plain stupid and wrong. Most people know that, and get that. The obvious is glossed over and the playas bowed to because they’re made men.
It was a prime opportunity to show the American people what isn’t obvious to them- blinded as they are by mis-placed faith in their leaders. It’s troubling enough that most Americans want to complacently believe in their system (Yes. Still. I know.). Let it be known that this was a missed opportunity for some plain speaking. Still, this is consistent with media having long ago abrogated their constitutionally protected responsibility (use it or lose it).
Ah well. Maybe Americans get it and are just too fucking exasperated to want to do anything about it.
One additional point that I was surprised the makers missed- or maybe they just ran out of time. But it would have been a fit ending to their story, as well as added bolstering of Ms. Born’s argument, and another count in the indictment against the PWG- who wear suits of teflon, apparently (did I mention, they’re baaaaaaaaaack?). So since the filmmakers didn’t address the following tidbit, I suggest this would make a fine epilogue:
2000 Commodity Futures Modernization Act [ CFMA ]
Which basically made into law that which Ms. Born was trying to prevent (yes, Virginia, the unaccountable members of the PWG decided that in the banksters vs. what was right and good for the people of the USA, they would choose the banksters):
“if a court had ruled that a swap was in fact an illegal, off-exchange futures contract, trillions of dollars in outstanding swaps could have been invalidated. This might have caused chaos in financial markets, as swaps users would suddenly be exposed to the risks they had used derivatives to avoid.”
[ Wikipedia ]
… was recommended by those stand-up dudes of the PWG and enacted one year after Brooksley Born left CFTC.
The documentary briefly covered how the collapse of Long Term Capital Management followed within weeks Ms Born’s testimony in Congress showed her concerns to be absolutely spot-on. Yet the asshats in Congress let the PWG off the hook with the spin that it as an ‘isolated’ incident.
But dig this.
Very soon after the CFMA was enacted, Enron blew up.
Yes, I know! Deja vu all over again!
Another isolated incident?
… and IT IS NINE YEARS LATER AND they’ve yet to close the Enron loophole. How can they, when every Wall St. firm now uses it?
In conclusion, Illargi says it better than I can:
“Our economic, financial, capital, and credit system is done and gone. What you’re looking at today is a corpse propped-up by the promise of future tax revenues from millions upon rapidly increasing millions of homeless and jobless Americans.
Unfortunately, that’s just the beginning. Because the financial system has been allowed to infiltrate the political system to the degree in which it has (a full-scale take-over), America’s political system is as bankrupt as its financial system is. It will take a long and hard time to replace.”
“Obama’s economic team of free market billionaires and financial hotwires includes most of those who helped Bill Clinton sell the theory that Americans didn’t need jobs. Actual labor, if you will remember, was for Asian sweatshops and Latin maquiladoras.” –Joe Bageant