Daily Archives: September 16, 2011

Going Rogue?

Matt Taibbi talks to David Shushter about the latest banking scandal.

Swiss financial services company UBS has admitted that a “rogue” trader has run up a loss of $2 billion dollars in unauthorized risky trades. The 31 year old trader Kweku Adoboli who worked in the bank’s London exchange as director of the now ironically named Global Synthetic Equities Trading team, was arrested yesterday morning at his apartment.

It seems Adoboli has since retained the law firm of Kingsley Napley, which previously advised Nick Leeson, the hot shot derivatives broker whose fraudulent, unauthorized speculative trading caused the collapse of Barings Bank in the 90’s.

Taibbi takes issue with the characterization of a “rogue trader” as a reason for this latest crisis, arguing that it’s indicative of a systemic problem. According to Taibbi, “`rogue traders’ are treated like bad accidents… But rogue companies are protected at every level of the regulatory structure and continually empowered by deregulatory legislation giving them access to our bank accounts.”

The root of the problem, he explains in Rolling Stone, is that investment banker’s brains are not wired for dull commercial bank business of taking consumer deposits and making conservative investments.

In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you’re not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up, then you won’t make it on today’s Wall Street.

At one time commercial banks and investment banks had to remain separate entities as mandated by the Glass-Steagall Act of 1933. Today, however, because of Gramm-Leach-Bliley Act of 1998 they can be combined. In Taibbi’s view, this marriage of investment banks and commercial banks has proven to be nothing short of disastrous.

“The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino,” he writes.

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Filed under Global Economy, U.S. Economy

Calling Out Libertarians (Part II)

Sam Seder rebuts various comments from libertarians on his Majority Report YouTube channel concerning alleged hypocrisy vis-à-vis libertarian principles in connection with the death of Ron Paul’s former campaign manager.

Regular commentators (you know who you are!) have probably exhausted the subject already in a previous post the other day, so here is the most highly rated comment on this particular video:

Libertarians are pretentious “social liberals,” that is conservatives without a conventional moral compass, and most Ron Paul nuts, particularly the online ones, are angry, young conspiracy theorists (9/11 “truth’ers) who think the “Illuminati” (Jews) is secretly tugging the strings of a “puppet govt.” to achieve “global enslavement” or “martial law” or some weird crap. Go to Alex Jones’ websites and notice the “Ron Paul 2012” endorsements. They’re worse than conservatives, honestly.

Quite aside from the fundamental objections to the libertarian philosophy that I have, the foregoing neatly expresses my increasingly exasperated frustration with Ron Paul supporters that I encounter all over the web, a good many of whom appear to be certifiably nuts.

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Filed under 2012 U.S. Election, US Politics, Wingnuts