Available Now! (click cover)

America's Counter-Revolution
The Constitution Revisited

From the back cover:

This book challenges the assumption that the Constitution was a landmark in the struggle for liberty. Instead, Sheldon Richman argues, it was the product of a counter-revolution, a setback for the radicalism represented by America’s break with the British empire. Drawing on careful, credible historical scholarship and contemporary political analysis, Richman suggests that this counter-revolution was the work of conservatives who sought a nation of “power, consequence, and grandeur.” America’s Counter-Revolution makes a persuasive case that the Constitution was a victory not for liberty but for the agendas and interests of a militaristic, aristocratic, privilege-seeking ruling class.

Monday, April 26, 2010

Abolish This Derivative

The most threatening derivative is overlooked in Washington: the power Big Finance derives from the State.


Kevin Carson said...

I read somewhere that securitization of mortgages wasn't even an option until the Feds got in the business of guaranteeing them. There were experiments with mortgage-based securities in the late '60s, but they went over like a lead balloon because they were so risky.

So when I hear liberals say the crisis resulted from an unregulated financial system, I think they're overlooking the fundamental structural role of the state in the overall form of the financial system.

That also includes the structural problems of corporate capitalism by which there is a plutocratic class with enormous piles of investment money, and a shortage of profitable investment opportunities. In an economy with wider distribution of wealth and decentralized production capability, where production capability was driven by local demand and a higher level of purchasing power for labor, most of the preconditions for our enormous FIRE economy wouldn't even exist.

Sheldon Richman said...

There are many such aspects. The Basel II Accord, an agreement among the world's major central bankers, set reserve requirements for banks. The reserve requirement was lower on mortgage-backed securities (MBS) than on actual mortgages written and held by that particular bank. MBS were deemed safer. Lower reserves of course mean more money to lend, more profit, but also more exposure. So holding MBS was encouraged, while holding individual mortgages (which entailed local knowledge) was discouraged. Try explaining that to the public in a sound bite.