The big short - its impact - (not a film review)

This is a follow up to my review of the film The Big Short, a film about the financial crash, in the film forum.

Why this film only shows half the story is that the traders, fund mangers etc act only to make money by making market corrections - they dont create the situations that cause them to come into being, they just maximise the financial opportunities they provide - " I smell opportunity".

I dont consider that any of the main protagonists in the film did anything wrong - they just did their job. They are not the villains of the piece. Bankers, credit agencies and legislators - do they have more to answer for?

I believe in capitalism - partly because it most closely represents human behaviour and because there is currently no realistic viable alternative.

The film only shows us the endgame - how had such an opportunity occurred?

Seemingly there was a complete failure in regulation within the financial sector to allow this to happen.

Within the American finance system they have the regulatory body the SEC - The Securities and Exchange Commission. The SEC ...

..was created during the Great Depression with the passage of the Securities Exchange Act of 1934, which was designed to BOLSTER CONFIDENCE in capital markets by providing investors with RELIABLE INFORMATION and by requiring that individuals and corporations deal with each other HONESTLY.

Seemingly they failed miserably in two of these areas in the period leading up to the crash and implicitly created false confidence in them !!.

In 2005 Congress passed the

Bankruptcy Abuse Prevention and Consumer Protection Act (BAPACPA)

Amongst the lobbyists for the bill were the credit card companies who apparently spent @ $100M on supporting it.

In 2008 the Financial Times quoted the following re BAPACPA

"the 2005 changes made clear that certain derivatives and financial transactions were exempt from provisions in the bankruptcy code that freeze a failed company's assets until a court decides how to apportion them among creditors."

Which transactions might they be ?

Regulatory bodies connected to finance here are paper tigers. Self regulation is in everyone best interests. Maybe but no one really believes that self regulation really works.

However in America the market is sacrosanct to the basis of everything the American ideal is founded upon. Regulation historically has been rigorous and protective to safeguard consumer and business confidence. In the market we trust. New York sneezes - we all get a cold.

Were these factors instrumental in the crash - was there a consequent relaxing of regulation - I dont know. All I do know is that somewhere along the line there was a colossal relinquishing of the responsibility to protect Joe public - who ultimately pays the price for this.

So ultimately who can you trust? Government to protect you - seemingly not. A lot of palm greasing goes on, the small guy is told to believe in market forces and is bamboozled by jargon in case he gets a bit too curious.

Forget it - watch some sport and relax - but you cant believe what you see on the athletics track as the sponsors are removing their funding because they dont trust the regulatory bodies.

Turn over to the footy - oh yeah that's corrupt too.

Cycling .. er.

Bet on the cricket ..er ... thats just not cricket.

what bodies can we trust to protect us and our interests?

Society is being screwed over - We are paying the price whilst others laugh all the way to the bank.

What can be done about it ?