It's over, the 13 Bankers have officially won - Simon Johnson

[jtabeb]

We are now officially and UNAVOIDABLY going to have the same experience Argentina had during their "Sudden-Stop" / Ka-Poom.

We ARE Argentina.

http://baselinescenario.com/2010/05/...ers/#more-7646

"
It is striking that while Treasury argues that increasing capital is the way to go with regard to financial reform, they are adamantly opposed to what would amount to more reasonable capital levels at the heart of the derivatives business.
This is beyond disappointing.
No doubt the administration feels good about what it has “achieved” on financial reform. The public aura of mutual congratulation will last for about three weeks.
But outside of the inner White House-Capitol Hill bubble, it is very hard to find anyone well-informed about the financial system who thinks that anything substantial has changed or that risks will be better managed as we head into the next cycle.
“Business as usual” is the abiding legacy of the Obama administration with regard to the systemic risks posed by this financial system. Treasury and White House let us down repeatedly and completely in the last 18 months on financial sector issues – just as they did (as decision-making bodies and as some of the same individuals) at the end of the 1990s.
At one point in early 1998, Larry Summers called Brooksley Born – the last person who really tried to rein in the dangers posed by derivatives (and it was a much lower level of danger then compared with now). Summers reportedly said, “I have thirteen bankers in my office, and they say if you go forward with this you will cause the worst financial crisis since World War II.”
We now seem to have come full circle to exactly the same people saying exactly the same things – no doubt top people in the administration are now calling Senator Lincoln and impressing upon her a version of the same point made by Summers to Born.
The 13 bankers have won, completely. Here we go again."

[loweyecue]

Re: It's over, the 13 Bankers have officially won - Simon Johnson

Where can one read the actual proposals by Senator Lincoln?

[KGW]

Re: It's over, the 13 Bankers have officially won - Simon Johnson

THE TRAGEDY OF THE COMMON REVISITED, by Beryl Crowe (1969); reprinted in
MANAGING THE COMMONS, by Garrett Hardin and John Baden W.H. Freeman, 1977;
ISBN 0-7167-0476-5

"There has developed in the contemporary natural sciences a recognition that there is a subset of problems, such as population, atomic war, and
environmental corruption, for which there are no technical solutions.

"There is also an increasing recognition among contemporary social
scientists that there is a subset of problems, such as population, atomic
war, environmental corruption, and the recovery of a livable urban
environment, for which there are no current political solutions. The thesis of this article is that the common area shared by these two subsets contains most of the critical problems that threaten the very existence of contemporary man." [p. 53]

ASSUMPTIONS NECESSARY TO AVOID THE TRAGEDY

"In passing the technically insoluble problems over to the political and
social realm for solution, Hardin made three critical assumptions:

a. that there exists, or can be developed, a 'criterion of judgment and
system of weighting . . .' that will 'render the incommensurables . . .
commensurable . . . ' in real life;

b. that, possessing this criterion of judgment, 'coercion can be mutually
agreed upon,' and that the application of coercion to effect a solution to
problems will be effective in modern society; and

c. that the administrative system, supported by the criterion of judgment
and access to coercion, can and will protect the commons from further
desecration." [p. 55]

ERODING MYTH OF THE COMMON VALUE SYSTEM

"In America there existed, until very recently, a set of conditions which
perhaps made the solution to Hardin's subset possible; we lived with the
myth that we were 'one people, indivisible. . . .' This myth postulated that we were the great 'melting pot' of the world wherein the diverse cultural ores of Europe were poured into the crucible of the frontier experience to produce a new alloy -- an American civilization. This new civilization was presumably united by a common value system that was democratic, equalitarian, and existing under universally enforceable rules contained in the Constitution and the Bill of Rights.

"In the United States today, however, there is emerging a new set of
behavior patterns which suggest that the myth is either dead or dying.
Instead of believing and behaving in accordance with the myth, large sectors of the population are developing life-styles and value hierarchies that give contemporary Americans an appearance more closely analogous to the particularistic, primitive forms of 'tribal' organizations in geographic proximity than to that shining new alloy, the American civilization." [p.
56]

"Looking at a more recent analysis of the sickness of the core city, Wallace F. Smith has argued that the productive model of the city is no longer viable for the purposes of economic analysis. Instead, he develops a model of the city as a site for leisure consumption, and then seems to suggest that the nature of this model is such is such that the city cannot regain its health because the leisure demands are value-based and, hence do not admit to compromise and accommodation; consequently there is no way of deciding among these value- oriented demands that are being made on the core city.

"In looking for the cause of the erosion of the myth of a common value
system, it seems to me that so long as our perceptions and knowledge of
other groups were formed largely through the written media of communication, the American myth that we were a giant melting pot of equalitarians could be sustained. In such a perceptual field it is tenable, if not obvious, that men are motivated by interests. Interests can always be compromised and accommodated without undermining our very being by sacrificing values. Under the impact of electronic media, however, this psychological distance has broken down and now we discover that these people with whom we could formerly compromise on interests are not, after all, really motivated by interests but by values. Their behavior in our very living room betrays a set of values, moreover, that are incompatible with our own, and consequently the compromises that we make are not those of contract but of culture. While the former are acceptable, any form of compromise on the latter is not a form of rational behavior but is rather a clear case of either apostasy or heresy. Thus we have arrived not at an age of accommodation but one of confrontation. In such an age 'incommensurables' remain 'incommensurable' in real life." [p. 59]

EROSION OF THE MYTH OF THE MONOPOLY OF COERCIVE FORCE

"In the past, those who no longer subscribed to the values of the dominant
culture were held in check by the myth that the state possessed a monopoly
on coercive force. This myth has undergone continual erosion since the end
of World War II owing to the success of the strategy of guerrilla warfare,
as first revealed to the French in Indochina, and later conclusively
demonstrated in Algeria. Suffering as we do from what Senator Fulbright has called 'the arrogance of power,' we have been extremely slow to learn the lesson in Vietnam, although we now realize that war is political and cannot be won by military means. It is apparent that the myth of the monopoly of coercive force as it was first qualified in the civil rights conflict in the South, then in our urban ghettos, next on the streets of Chicago, and now on our college campuses has lost its hold over the minds of Americans. The technology of guerrilla warfare has made it evident that, while the state can win battles, it cannot win wars of values. Coercive force which is centered in the modern state cannot be sustained in the face of the active resistance of some 10 percent of the population unless the state is willing to embark on a deliberate policy of genocide directed against the value dissident groups. The factor that sustained the myth of coercive force in the past was the acceptance of a common value system. Whether the latter exists is questionable in the modern nation-state." [pp. 59-60]

EROSION OF THE MYTH OF ADMINISTRATORS OF THE COMMONS

"Indeed, the process has been so widely commented upon that one writer
postulated a common life cycle for all of the attempts to develop regulatory policies. The life cycle is launched by an outcry so widespread and demanding that it generates enough political force to bring about establishment of a regulatory agency to insure the equitable, just, and rational distribution of the advantages among all holders of interest in the commons. This phase is followed by the symbolic reassurance of the offended as the agency goes into operation, developing a period of political quiescence among the great majority of those who hold a general but unorganized interest in the commons. Once this political quiescence has developed, the highly organized and specifically interested groups who wish to make incursions into the commons bring sufficient pressure to bear through other political processes to convert the agency to the protection and furthering of their interests. In the last phase even staffing of the regulating agency is accomplished by drawing the agency administrators from the ranks of the regulated." [pp. 60-61].

[bpr]

Re: It's over, the 13 Bankers have officially won - Simon Johnson

Where can one read the actual proposals by Senator Lincoln?

Not sure if you can, but here's the bill and the relevant sections.

Subtitle A--Regulation of Over-the-Counter Swaps Markets
PART I--REGULATORY AUTHORITY

• SEC. 711. DEFINITIONS.

• SEC. 712. REVIEW OF REGULATORY AUTHORITY.

• SEC. 713. RECOMMENDATIONS FOR CHANGES TO PORTFOLIO MARGINING LAWS.

• SEC. 714. ABUSIVE SWAPS.

• SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVITIES.

• SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS ENTITIES.

• SEC. 717. NEW PRODUCT APPROVAL--CFTC--SEC PROCESS.

• `SEC. 3B. SECURITIES-RELATED DERIVATIVES.

• SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS.

PART II--REGULATION OF SWAP MARKETS

• SEC. 721. DEFINITIONS.

• SEC. 722. JURISDICTION.

• SEC. 723. CLEARING.

• SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT.

• SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS.

• `SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT.

• SEC. 726. RULEMAKING ON CONFLICT OF INTEREST.

• SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.

• SEC. 728. SWAP DATA REPOSITORIES.

• `SEC. 21. SWAP DATA REPOSITORIES.

• SEC. 729. REPORTING AND RECORDKEEPING.

• `SEC. 4r. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS.

• SEC. 730. LARGE SWAP TRADER REPORTING.

• `SEC. 4t. LARGE SWAP TRADER REPORTING.

• SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP PARTICIPANTS.

• `SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP PARTICIPANTS.

• SEC. 732. CONFLICTS OF INTEREST.

• SEC. 733. SWAP EXECUTION FACILITIES.

• `SEC. 5h. SWAP EXECUTION FACILITIES.

• SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT BOARDS OF TRADE.

• SEC. 735. DESIGNATED CONTRACT MARKETS.

• SEC. 736. MARGIN.

• SEC. 737. POSITION LIMITS.

• SEC. 738. FOREIGN BOARDS OF TRADE.

• SEC. 739. LEGAL CERTAINTY FOR SWAPS.

• SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.

• SEC. 741. ENFORCEMENT.

• `SEC. 4b-1. ENFORCEMENT AUTHORITY.

• SEC. 742. RETAIL COMMODITY TRANSACTIONS.

• SEC. 743. OTHER AUTHORITY.

• SEC. 744. RESTITUTION REMEDIES.

• SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.

• SEC. 746. INSIDER TRADING.

• SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.

• SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

• `SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

• SEC. 749. CONFORMING AMENDMENTS.

• SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS.

• SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY COMMITTEE.

• SEC. 752. INTERNATIONAL HARMONIZATION.

• SEC. 753. ANTIMARKET MANIPULATION AUTHORITY.

• SEC. 754. EFFECTIVE DATE.

Subtitle B--Regulation of Security-Based Swap Markets

• SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.

• SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED SWAP AGREEMENTS.

• SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

• `SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS.

• `SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES.

• `SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED SWAP TRANSACTIONS.

• `SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR SECURITY-BASED SWAPS AND LARGE TRADER REPORTING.

• SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.

• `SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.

• SEC. 765. RULEMAKING ON CONFLICT OF INTEREST.

• SEC. 766. REPORTING AND RECORDKEEPING.

• `SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-BASED SWAPS.

• SEC. 767. STATE GAMING AND BUCKET SHOP LAWS.

• SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT OF SECURITY-BASED SWAPS.

• SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 1940.

• SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISORS ACT OF 1940.

• SEC. 771. OTHER AUTHORITY.

• SEC. 772. JURISDICTION.

• SEC. 773. EFFECTIVE DATE.

http://thomas.loc.gov/cgi-bin/query/D?c111:4:./temp/~c111LnzKBf::

At the very least, this was one of Lincoln's proposals that did make it into the final Senate bill:
SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS ENTITIES.

[charliebrown]

Re: It's over, the 13 Bankers have officially won - Simon Johnson

This dovetails into the work of straus and howe in their book "the fourth turning ". In it the authors argue that every four generations, general societal thoughts repeat themselves. They provide architypes for each generation and describe how the world looks as each of the generations move from children, to young adults, to middle agers, to the old.

I am a very late boomer. Ever since I became aware of the world around me things have been getting worse. My tendency is for indidualism, and decay. However this was not always the case. I have many friends who are actually WWII vets. They believe in the power of society, they have faith in institutions and that things get better.

I would suggest a read, the book was written about 1995, yet is suggested things like financial crisis, terror attacks, world conflict, guess when? around 2010, roughly 80 years or 4 generations from WWII.

[tsetsefly]

Re: It's over, the 13 Bankers have officially won - Simon Johnson

they actually had already won... in 1913...

[reggie]

Re: It's over, the 13 Bankers have officially won - Simon Johnson

So, circa 1991 Jacques Attali wrote Millennium: Winners and Losers in the Coming World Order. Here is the image one finds when they open the front cover.

uploadmillenniumjacques.jpg