FuzzNJ wrote:From what I understand the derivatives market is several times larger than the entire world economy.
It's secret and unregulated. One party wants to stop more regulation and get rid of regulation. The other one wants to do less of that and add some more to cover stuff like this market. We need a government to regulate stronger, bring back glass steagall, and a bunch of other things that are over my head to prevent another economic blow up.
From after the new deal up to 1980 there weren't any big bubbles bursting, huge economic downturns etc. Then the Reagan administration started the whole deregulation thing and shifting the tax burden from the wealthy to the middle class. Since then the rich have gotten richer at an unprecedented clip and we've had several economic 'tragedies' that no one saw coming, which of course is bs.
The derivatives market has grown almost unbelievably large. Our best chance at reigning in the OTC derivatives market in time came when Brooksley Born, new Clinton appointee to run the CFTC, tried to initiate some degree of regulation of that 'dark' market and was effectively shut down in a Washington turf war which was eventually won by laissez-faire economists Alan Greenspan, Larry Summers, and Robert Rubin. Deregulation continued unchecked through subsequent administrations in the US, the consequences of which the world faces today with a half quadrillion dollar derivatives market time bomb buried in its financial system.
Born's effort to regulate the OTC derivative market was actually shut down during the Clinton administration...not that subsequent administrations showed any real interest in regulating them either.
Call me paranoid but I think the Lehman Brothers bankruptcy and ensuing world financial market turmoil in 2008 wasn't the end of it, it was just one of the early tremors of a likely financial earthquake.