when the heads gonna roll?

regulating derivatives markets would be a great thing. as this (and this and, to some extent, this) make clear, though, what we're looking at in finance is such a baseness in morality that nothing short of public trials and executions is going to protect us. in 2007 and 2008, wall street, through bribery, tried to use public pension systems as sinks for their toxic assets. in new mexico, for instance, something called vanderbilt capital advisors (a major donor to the campaign of bill richardson, the state's republican governor), convinced the state's teachers' retirement fund to buy $90 million worth of "equity" tranche assets. that particular sort of tranche is most famous for spawning the term 'toxic waste,' and, incidentally, for the ruination of global finance. while $90 million may seem a paltry sum to you, consider the $525 million invested in those same assets by the new mexican state investment council, also thanks to the advice of vanderbilt capital advisors. tpm says that, as of today, vanderbilt has paid new mexico a total of $3.7 million in interest. it's also gone bankrupt.

this follows on a wave of public pension scandals, some of which i wrote about a few months ago. with medicare now under severe pressure, and social security, the executive branch's de facto credit card, set to run out in 2037, we've now got what is evidently a crisis in the public pension system that's going to be exposed by the end of the era of cheap money. i don't know what effect CDOs will ultimately have; probably, the purchase of bad assets was a drop in the bucket. but given that these systems have as their charge the economic well-being of vast millions of americans, and that they are already hobbled by hostility in many state legislatures, as well as by our flagging economy, any kind of additional pressure is unacceptable.

i'd say 'shoot all of them'--them being the guys who sold the CDOs--but that's old hat, and it's not going to happen. as usual, nobody will be prosecuted, largely because we've had our laws redefined so as not to make what they did a crime. while bribes break the law, 'finder's fees' are business-as-usual. it could take a generation of sustained effort to revamp the legal system so that this kind of rent-seeking with severe negative externalities is properly criminalized and prosecutable. as things stand, wall street can desroy the world, but as long as it thought it had a legitimate opportunity to make a profit, it remains untouchable. that might've been able to fly, even if unjustly, before every single store of cash in the country was looted. now, though, i don't think we can afford to be so sanguine.