Why aren't Credit Default Swaps Illegal? Because they make the rich too much money...

Another depressingly clear observation from UnderpaidGenius.com, this time, Stowe Boyd (who is pretty much my favorite blogger these days) includes a huge excerpt from an NYTimes.com editorial--I'm only going to include the nuts & bolts of it, though:

 

Who Will Rein In Those Credit Default Swaps?

DERIVATIVES are responsible for much of the interconnectedness between banks and other institutions that made the financial collapse accelerate in the way that it did, costing taxpayers hundreds of billions in bailouts. Yet credit default swaps have been largely untouched by financial reform efforts.

This is not surprising. Given how much money is generated by the big institutions trading these instruments, these entities are showering money on Washington to protect their profits. The Office of the Comptroller of the Currency reported that revenue generated by United States banks in their credit derivatives trading totaled $1.2 billion in the third quarter of 2009.

...

So the problem is that rich rich rich people are making far too much money betting on the future of things like Greece and AIG for the regulators to step in and stop it, even though these swaps are the things that could cause a massive implosion of the financial system.

via underpaidgenius.com

...and thanks to our lovely system (just made more lovely by the SCOTUS decision to let corporations have full free speech rights), the laws protecting a banks ability to do credit default swaps can be bought and paid for by the very rich people who make the most money off of said credit default swaps.

So, this isn't really a democracy anymore, is it?

Maybe it's a cashocracy? A Richpersonocracy? NO, I've got it: a *corruptocracy*... yeah... that's perfect.

Posted via web from thepete's posterous