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Monday, May 28, 2012

Credit Derivatives and a Sabaean Theft of the Oxen of the JPMorgan Jobses: Banking Laws and Legality: Time to Change the Rules of the Game?

The title to this posting applies to a highly informative article by Azam Ahmed at the New York Times on How Boaz Weinstein and Hedge Funds Outsmarted JPMorgan.

The market for credit derivatives has struck a "gambling" bank again.

Whatever the "croupier" regulators in Washington D.C. are doing about gambling with credit derivatives, it does not seem to be working.

Can keeping banks from "gambling" and keeping other "gamblers" from "counting financial cards" be that difficult?!

Or have we none smart enough in government to deal with the people they are supposed to regulate?

Maybe the government should hire some of the people who are MAKING billions to tell them how the system can outsmart those who are busy outsmarting the system. Why are all the top chess players on the private side of the equation?

On the other hand, we are very much in favor of wealth accumulating in the hands of those who understand wealth, and who know what to do with money, so perhaps this is just a battle for the survival of the fittest in financial circles.

But then again, what gain does the average citizen have from this, other than financial ups AND downs. Recessions are adjustments, nothing more.

After all, as a legal matter, all kinds of gambling can be prohibited by law, also financial gambling by banks and funds. Maybe also the government should hedge ITS bets!

But what then would be the cost of prohibition? Would the money all then run off to overseas gambling meccas? Perhaps.

Nevertheless, who says we have to play by traditional rules that always favor those who have deeply studied and best understand the game to be played, in which case the result of the game is determined by those same rules -- as John von Neumann game theory so aptly demonstrated.

It is perhaps time to change the rules and level the playing field -- again.

Pawn to King 5 to open the game!

That might bring things back to "square one".

Crossposted at LawPundit.

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