Time for Fireside Chats

A lot of people are cowed these days by the complexity of CDO's and CDS's and all manner of other crooked swindling that has been going on in Wall Street the last few years. But it isn't really all that complicated. Credit Default Swaps are like the kind of insurance the British Parliament realized in the Napoleonic era had to be outlawed: you can't insure cargo you don't own then tell the French where the ships will be so they can sink them. That's exactly what Credit Default Swaps are: bets (insurance) on equity the bettor doesn't own, that the underlying instruments will fail. A typical example is to bet on trash tranches of collateralized debt obligations based on subprime mortgages. The bettors don't need to even own the debt obligations, which is why the failures of mortgages are multiplied many times over in the crash. To add to that obvious "moral hazard," the bettor then urges sales of collateralized debt obligations which they are betting against to unsuspecting suckers, and lobby Washington, especially the mendacious Party of No, not to do anything about it. It amounts to a gigantic Casino System.

Another way of looking at it would be if you could go around town and pick out all the houses that looked like they were standing empty and could go up like a torch with just a thrown match, and buy fire insurance on them, even though you didn't own them. Then collect on risk you never owned in the first place. In the uberrimae fidei (utmost good faith) world of real insurance, of course, that is illegal, but in the high flying world of Wall Street, it's considered brilliant, and worthy of multimillion dollar bonuses.

These abuses simply must be curbed, and now, because they will lead to another meltdown, sooner rather than later, if they're not.

President Obama needs to study up on this stuff, get straight in his mind exactly how he wants to reform the system to that Wall Street is no longer a casino designed to extract wealth rather than create it, then embark on a series of fireside chat-like communiqués to the American people, to explain to them just how certain practices in Wall Street caused the worst recession since the 1930's, what the Democrats intend to do about it, and exactly how it is that the Mendacious Party is opposing their best interests in favor of the interests of an elite few who've been gaming the system for years.

I just have to believe that if people would only have the opportunity to hear a clear, simple explanation of how it is that the Rebpulicans are not on their side, but are siding with the very crooks who caused this mess, there would be a groundswell of support, beyond even what there already is, to fix these problems, and the political losers would be Congressional and Senate Republicans.