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Submitted by Scott Cleland on Mon, 2010-02-22 19:13
In one of the best, most strongly-worded and serious letters to the FCC that I have read in my 18 years following FCC issues closely, the united broadband industry's letter to FCC Chairman Genachowski is simply a must-read; it explains why the FCC's serious interest in reclassifying unregulated broadband information services as regulated telecom services is among the worst and most destructive ideas the FCC has ever seriously considered.
The letter characterized Title II reclassification as:
A particularly strong summary statement was:
Submitted by Scott Cleland on Thu, 2010-01-21 16:03
To discern the real “root” causes of the financial crisis of 2008, one must probe beneath the surface and examine the health of the “root system” of our capital markets “forest.” The roots of the capital markets forest are sound economics; the natural market function of automatically equilibrating supply and demand and risk and reward, that is commonly appreciated as Adam’s Smith’s “invisible hand.” We generally assume that the natural market strength of the capital market forest’s root system ensures that all the trees are not in danger of being blown over in the crisis of a storm.
In the fall of 2008, we all were shocked to learn that the root system of our capital markets, that we had always assumed was healthy and strong, was actually frighteningly weak and brittle requiring the slapdash reinforcement of multi-trillion dollar emergency scaffolding of whatever material was close at hand, a TARP, bailout lifelines, capital sandbags, etc. -- to buttress the main market “trees” from toppling over, trees that the Government judged to big to be allowed to fall.
Submitted by Scott Cleland on Tue, 2010-01-12 18:59
As the first expert witness to testify before Congress on what went wrong with Enron, the worst U.S. fraud/bankruptcy ever at that time, Google's announcement that it has applied to the Federal Energy Regulatory Commission (FERC) for "blanket authorization... to make sales of electric energy, capacity and ancillary services," and for "certain exemptions" from reporting and accountability... is eerily reminiscent of Enron Broadband's disastrous efforts to bring swash-buckling, gee-whiz technology to the energy futures market over a decade ago.
What's different between Enron and Google is that Enron was an energy company that entered into the tech and energy auction businesses, whereas Google is a tech and ad-auction business entering the energy business.
Deja Vu: What's eerily similar?
Submitted by Scott Cleland on Tue, 2009-09-08 10:27
How could American taxpayers get stuck with a multi-trillion dollar tab that they weren’t even aware that they were running up? How could that huge tab still be allowed to run up unchecked today? For the Financial Crisis Inquiry Commission, the sad answer is one of the biggest root causes of last fall’s devastating financial crisis and one of the biggest continuing systemic risks to the financial system and the economic recovery.
A decade ago, in what may prove to be the most expensive bipartisan legislative mistake in U.S. history, a bipartisan policy became law that effectively ensured that no Federal regulator had oversight or enforcement jurisdiction over derivative financial instruments. The Commodity Futures Modernization Act of 2000 (CFMA) created “legal certainty for excluded derivative transactions.” That law allowed a shadow derivative overlay system to be built literally on top of the public financial system, with none of the inherent accountability of the underlying financial system. In other words, a deliberate bipartisan U.S. government policy change a decade ago unwittingly created an unaccountable “black hole” market that sucked enormous value out of public markets, (Bear Stearns, Lehman, AIG, Fannie, Freddie, securitized sub-prime mortgages, etc.) while laundering the risk to the U.S. taxpayer.
Submitted by Scott Cleland on Fri, 2009-07-03 17:35
When Investment News asked John Bogle, Vanguard's founder and the father of indexing, about my "Indexing into the Ditch" thesis (that indexing is one of the root causes of the financial crisis) he said: it “is nuts! Last time I looked, index funds accounted for about 0.4% of all stock trading ... Just perhaps the other 99.6% might bear a teeny-weeny bit of the responsibility.”
Let me first respond to Mr. Bogle's points in order.
The thesis "is nuts! "I must admit I smiled at the ad hominum implication that my thesis was "nuts" and not worth listening to; I remembered that Bernie Ebbers called me the "idiot Washington analyst" because my research was the first to charge that WorldCom's business simply did not add up.
Submitted by Scott Cleland on Fri, 2009-06-12 12:34
Submitted by Scott Cleland on Thu, 2009-06-11 17:43
Despite the widely held view that indexing is the safest way to invest, indexing helped recklessly drive our financial system and economy into the ditch last fall.
A major reason the system has become so unstable and dangerous to financial security is that over ten percent of money management vehicles on the road today are indexers, which by design drive the wrong way against the oncoming traffic of a market economy that allocates capital based on economic merit.