[ExI] How do we construct workable institutions and ethical behaviors?

[Darren Greer]

On Sun, Dec 11, 2011 at 11:37 AM, spike <spike66 at att.net> wrote:


  Then when those exotic derivatives
>
> eventually went bust, the bank was holding property which was still worth
> something.
>


Or so they thought. What they hadn't counted on was the entire subprime
market going bust, and a dramatic fall in housing prices because of it.
They were still thinking in terms of the prime mortgage model, when
foreclosure meant you could recoup. Instead they were left with billions in
toxic assets,  insurance companies who were going down the drain because of
default swap payoffs, and mortgage-backed securities worth nothing and
eroding the value of the institutions who issued them. It's easy to play
the blame game -- government, borrowers, regulators, financiers. But in the
end we have an almost perfect example on every side of the triumph of greed
over common sense.  Somewhere along the line the system broke down. The
crazy thing is, we know where and we have done zilch to address it. That's
what Occupy was about, in my opinion. Use the old 1930's style external
feedback mechanisms to steer the beast, since the internal mechanisms no
longer seem to be working.
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