Sunday :: Sep 21, 2008

Thought for the Day


by Mary

Paul Krugman recently said:

[I]n a way we actually do have fair trade with China. They sell us poisoned toys and tainted sea food and we sell them fraudulent securities.

Kind of funny how this bad deal is blowing up for both China and the US.

After all, last year China shipped pet food to the US that killed our dogs and cats because it had been doctored with Melamine to increase how much protein it appeared to have. Today China is roiled in a major scandal where children are dying from tainted milk that contains the same toxic chemical used in the pet food last year.

And for the US? For years we sold the Chinese toxic CDOs telling them that the US financial markets were the safest in the world. Today, we are suffering from a financial sickness that comes from believing magical risk diversification instruments would keep the financial industries from ever holding the bag for bad debt. Because, once they decided that credit swaps were the risk-free way to fund risk, they went about creating riskier and riskier debt and leveraged it to the hilt believing only the little people (those mortgage holders who got in over their head) would pay. But that house of cards has come tumbling down since it's clear now there isn't enough money in the world to fund the debt that has gone bad and now we are paying the piper for their greed.

In both cases, our governments have let down the people by believing that greed is good and that regulating industry will only get in the way of the wealth makers. And thus, we both reap our harvests of woe and worry about will be the consequences for the ordinary citizen once the dust settles. And I think it is time for the people of both countries to hold their governments accountable for their siding with greed over the commonweal.

Mary :: 11:19 AM :: Comments (7) :: Digg It!