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$1.4 quadrillion equals $206,000 in derivative exposure for every man, woman, and child on the planet. We’re not just talking about us relatively rich and spoiled Americans, we’re talking about the true masses.
3) Bank stocks are rallying, partly on an optimistic tone from the G20, but also because the House of Representatives, in a new display of moderation, passed another executive compensation bill yesterday, which drops the 90 percent tax on bonuses for people that make more than $250,000 at firms receiving TARP money, and gives Treasury more discretion in deciding which bonuses are excessive.
Originally posted by theWCH
Is there any way that a $1.5 Quadrillion derivative bubble doesn't ultimately destroy everything?
Like, have we already crossed the event horizon?
Wall Street’s inordinate amount of influence on Washington policy was achieved through a combination of campaign contributions, an unwavering belief in the idea that the financial wizards making billions on transactions with nothing behind them knew best, and the fact that Wall Street has become akin to a minor league system for those in charge of regulating the financial industry.
With Wall Street holding the levers of American political power over the past two decades, financial wizards were able to end regulations separating commercial and investment banks. They also enacted a ban on the regulation of credit-default swaps, instituted a measure that allowed banks to judge their own financial health and passed a law increasing the amount of leverage investment banks were allowed to take on. Those lax regulations combined with a virtually absent Securities and Exchange Commission produced the excessive risk-taking that brought the world economy to its knees.
The U.S. economic and financial crisis is akin to those seen in emerging markets in recent years, according to Simon Johnson, the former chief economist at the International Monetary Fund. Johnson was instrumental in restructuring the economies of South Korea, Malaysia, Russia and Argentina.
Writing for the Atlantic Online, Johnson said that those aforementioned crises and the one facing the U.S. are all connected by a similar thread: the fact that powerful elites in the financial industry hold so much sway among policymakers that they have the power to influence public policy in a way that is beneficial to themselves, but perhaps not for the country as a whole.