History listen for today

One big thing that made this market catastrophe different was more a function of form than substance. In both cases, it was debt. But back then, debt was "borrowed money".

Today, debt is "leverage", and leverage is the essence of every derivative product. It is the proliferation of and failure to account for derivatives that are the hallmark of this Crash of 2008. Not the derivatives themselves, just the failure to account for them, as in, understand them, trade them on a transparent exchange, provide valuation mechanisms for them (and, boy, didn't the ratings agencies screw that one up), and regulate who could issue them and how many any one entity could be encumbered by them.

But that is all form: this time, derivative form. The substantive issue is the greed that comes from using someone else's money to line your own pocket.

And that is the Movietone listen lesson for today (hattip Barry).

PS: Many people put much of the blame for the '29 Crash on poor old Dr. Irving Fisher. But he was just a cheerleader, rah-rahing for the losing team. He did try to make something of a science of economics, but, to Guambat's taste, no one has yet done a passable job of that. For Guambat, economists are not yet at the benchmark stage, being merely at the stage of the "paddles" in the old, early computer "Pong" game, being one point of resistance and return of ideas. For Guambat, economics still is a primitive game in progress. Much like humanity in general.