We received our wake up call during Katrina when we discovered how incompetence flows from the top down. Yet the near collapse of the world economy has not focused on the failure of regulation enough.

Our regulators have been excused by hiding behind the tissue paper curtain of “…nobody could see it coming”. The blaring response should be: If you didn’t see it coming you are either blind, incompetent or guilty of complicity.

Every citizen should question the Federal government’s ability to protect or even attempt to protect us from the unscrupulous and greedy. Take for instance the dangers of Tobacco. It was not the federal government who brought to light the dangers and costs to our society of smoking and chewing and snorting of this cancerous product.
The Congress held hearings and allowed corporate leaders of the industry to blatantly perjure themselves.

The pressure came from State District Attorneys and personal injury attorneys who proved that the industry knew very well the danger of their product. The motive for attacking these corporations was not noble. It was a matter of money. So while we know with this fine of Goldman Sachs that wall street did break the law, the company did not regard it as matter of criminal behavior, to them it was the cost of doing business. So perhaps to change behavior the country needs to make the cost higher.

Bigger, much bigger fines and profitable civil class action law suits on behalf of stock holders and bank customers who were never notified that their savings and mortgages were put into high risk investments and indefinable instruments and side bets.

It should be noted that the New York District Attorney did more investigations and found more irregularities than any federal agency. One would think congress would be awash with investigations and inquiry and hearing on this matter. They are not. One would think the fourth estate would be digging and probing, they are not.

But we have Tabbi and a music magazine leading the charge and that says a great deal about this country. Our faith in government has been betrayed and corrupted and we should be very afraid. The whole world is looking at how we handle this and we should take a lesson in corruption from Robert Kennedy who noted that at times the enemy is within.

“…not permitted to turn a blind eye…” really says it all. For some reason, it sounds like the talking to that the UAE sheikh that got busted for torturing someone on video a while back must have gotten. “Look, if you just hadn’t filmed it, we wouldn’t be having this conversation. Seriously though, could you just keep your head down until we can revise things so that, in the future, the electrocutee is legally at fault?”

From the BlogofSandiego.com

Condo developer Jeff Greene buys his own “credit default swaps”

Nobody knew better than Los Angeles apartment mogul Jeff Greene when the real estate bubble would burst. He was one of the main architects of the fraudulent loans that inflated real estate prices. Then he bet that the whole edifice would come tumbling down and made a billion dollars on that bet. He had discovered “credit default swaps” (CDS). Watch him explain to a CNBC reporter how his only regret is not doing “twice as much”:

http://media.cnbc.com/i/CNBC/components/Syndicated%20Video%20Player/videomodule.swf?id=867451979&pcode=cnbcplayershare&play=&base=http://plus.cnbc.com/stickers/partners/cnbcplayershare/

The star-struck reporter obviously did not know about Greene’s scam of creating bad loans and then buying the financial instrument (CDS) that bet on them not defaulting. Every CDS traded was grossly underpriced because the market did not know how bad the underlying loans really were. But Greene knew. He was therefore able to buy low (before the markets realized the risk) and sell high (after the markets realized the risk) the oldest trick in the book.