Volcker Doesnt Get The Point.

Paul Volcker is one smart good man...but he just doesn't understand the extent of whats happened on Wall Street and the financial system since he left the helm of the Fed. The credit system is so far beyond complex that not even Nobel Laurette's can figure it out. Wall Street has created the time bomb that is called derivative finance and that has morphed into into the perfect mouse trap. For the rest of time and well into infinity we are going to have systemic risk.

online.wsj.com/article/SB125313031639216991.html

www.bloomberg.com/apps/news?pid=20601087&sid=alf9Wh14TNZ4

Mr. Volcker is so idealistic that just reading these two articles makes me feel like I am 15 years old. To that I say thank you sir! But the 40 year old that is me says its not happening.

How is Wall Street going to take on less risk? They have to take more risk, more leverage, and create fancier more complex derivative products.

How else are they going to finance and manage all of their off balance sheet exposure?
How are they going to keep the shadow banking system alive?
What happens to all of those Interest Rate Swaps?

All of these things need massive leverage and risk just to keep things in line. This is the system they created. A system that was created on Greenspan's/Bernanke's watch. A system that had to be created because America is a $14.4 Trillion credit driven economy. An economy that is so leveraged to housing that government suckered everyone into thinking that its the American Dream.

Banks cant go back to just lending. What is this? Lets all go back to what things were in 1950? 1960? 1970? Ridiculous! You allowed the commercial/deposit banks to merge with investment banks and investment firms. Deal with the consequences. You cant legislate greed just like you cant legislate morality. You can try to regulate it, but good luck in the current lobbying environment.

This is where the bulk of regulation is needed. In Washington DC!
The lobbyists have got to be neutered. They need to be shown the door. They cant stick their heads in every time we talk about serious financial reform. Fix the lobbyists problem first then things will fall in line slowly.