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Standards of Business Practice
Facilitation of Corruption Charges to Prevent Greed on Wall Street and so

Standards of Business Practice

Aetixintro
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Posted 09/18/09 - 11:32 PM: Subject: Standards of Business Practice	#1
Should one erect a supervision entity that can punish greed by pointing at taking unreasonable risk? Paul Krugman lashes out at the academic economists because they are no good according to his claims. It is my opinion that people are reasonable rational in the market, but there may exist business cultures that drive the economists crazy and make them go into greed mode. The economists then begin to seek insane short-term profits. Therefore, while one can assume good market mechanisms most of the time, one should perhaps make room for the abnormal bounds in the market assumptions. Should we cool down this possibility, mode of greed by threatening with strict prison sentences and harsh economic fines, both corporate and personal? From what I read of the financial crisis, the institutions of surveillance, supervision, regulation have been way passive and lenient. My suggestion of both correction of the theoretical foundation and institutional changes here may initiate better times lasting longer and preventing insane ups and downs. I'm just thinking loudly here. I'd like you to discuss this in light of this article. Cheers! Edited by Aetixintro on 09/19/09 - 01:51 AM
Efficacy of "for since it is at present manifest to me that even bodies are not properly known by the senses nor by the faculty of imagination, but by the understanding alone" - Descartes, Meditation II I'm always wanting more, Anything I haven't got, Everything, I want it all, I just can't stop - The Cure, Want

unrealist42
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Posted 09/30/09 - 04:05 PM:	#2
What the economists did was create mathematical models. All these models had a point where if certain things happened the model would fail spectacularly and at the scale they were operating take the entire world economy down with it. Where the economists were disingenuous was in downplaying the chances of that happening and the dangers if it did. This would not have happened at all if the financial system had not been systematically deregulated over the past few decades. Back in the 90s when Long Term Capital Management collapsed it became very obvious that the entire financial system was in great danger from unregulated activities but no new regulation came from that, only further deregulation. The problem with financial regulation is that the foxes are guarding the hen house. Goldman Sachs and Morgan Stanley have long provided the top executives running regulatory agencies including the SEC, the Fed and the Treasury. It is revealing that the $80billion given to AIG was to pay off credit default swaps to Goldman Sachs and Morgan Stanley and Bank of America at 100 cents on the $ while every other firm was losing their ass on CDRs. The only way I can see to rein this in is to make it prohibitively expensive. A small transaction tax would certainly slow market speculators and push a lot of the market manipulators away while normal traders could easily absorb the added cost. The revenue could then be used to repay the cost of rescuing the economy provide a fund to do so when it happens again.

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