Saturday, February 13, 2010

This Saturday Is Different

I have been reading TOO BIG TO FAIL by Andrew Sorkin for the last several days. As those of you who have been reading my blog for a while know, I worked in the field of investment securities and portfolio management for many years. Either, Sorkin is writing about something that is over his head, or, there really were no experts when it came to dealing with the financial crisis on Wall Street, in either the banks or the law firms that were advising the banks, or, the people in Washington that were trying to find solutions to the current problems. What there was was just so many clowns crawling out of the same little car as you would see in the circus, and then not knowing which way to go.

If ever there was an argument for better and more comprehensive regulations of banking, investment banking, and the capital markets, this book, and I am sure others I have not read yet, provide all the reasons why, unless something is done that is meaningful in the way of better regulations, we are all headed back down that same road to the next financial crisis again. I guarantee that.

I have written this more than once, shit, whether in a brown paper bag or a silk purse with gold trim is still shit. The credit rating agencies are responsible for the mortgage bubble and you don't have to be an Einstein to figure that out. Unless steps are taken to regulate the credit rating agencies and hold their feet to the fire, the tinder is just sitting there waiting to be lit to start the next financial crisis and bond market meltdown. This is not rocket surgery. But, unfortunately it is a lot of politics. Keep your money in cash if you're going to need it, and say your prayers that someone somewhere will be able to open up some eyes and minds to what is waiting for us down the road if we do not change the way we do business. And, you can throw the Federal Reserve Bank in there too.

Stay tuned.

Federal Home Loan Bank Commemorative Stamp, oil on paper, first exhibited May, 1992, Covington, KY.

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