Re: [A-List] JP Morgan's *$23tn* derivative bust?

[Rob Schaap <bantam@xxxxxxxxxxxxxxxx>]

Many thanks, Anne.  Lots to think about here.

It does occur to me, though, that if we ever did get to this 'free market',
the initial beneficiaries would parlay their wealth into competitor-stifling
political institutional power.  Might that not be another lesson we learned
from the railroad story?  That the first thing a behemoth with something to
protect might do is contrive to construct an institutional wall against those
Schumpetarian gales?  Towards a sort of Big Finance corporatism.  I mean, a
truly 'free market' is always gonna be an abstract ideal, isn't it?  If ever
it could be made to happen, it couldn't be made to last, could it?

Not that Schumpeter was wholly against the idea, of course, what with the
cycle-ameliorating role of monopolies.

The price of that might be slightly retarded innovation, but innovation in
finance is obviously a fraught business, anyway, isn't it?  What with
combinations of complex new instruments serving to confound risk evaluation,
favour big entities, and turn productive firms into Enrons (creating
incentives to deplete infrastructural investment, to allocate unproductively
and reward the unproductive - or, in Marxian lingo, to forget you need a C
after M if you're gonna get to M').  Australia's AWA (Australian Wireless)
once contributed hugely to the physical backbone for the national and
international network here - but it, too, went under after its 'core business'
turned to speculation on the eighties.  Now we're stuck with sub-optimal
imports (given that Australian conditions are very different from those
technology sources) and a privatised Telco floundering hopelessly in share
markets and merger morasses, strategically focused away from the domestic
market in order to keep its growth potential up to shareholder expectations,
and, given potential competition in what we once thought a natural monoipoly,
spending on marketing what it used to spend on infrastructure.

Come to think of it, it was the railroads which transformed the US economy
into a sharemarket-driven (and hence ultimately fund-controlled) economy in
the first place wasn't it?

Apologies as ever if I'm talking crap.  I can't for the life of me see why
aimlessly circulating potential capital and uncontrolled private credit
creation is a Good Thing - and may, in my innocence, not appreciate the
intrinsic value of Uncle Sam's new core business.

Cheers,
Rob.