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I work in corporate reorganization and bankruptcy.

Submitted September 17, 2008 - 1:11 pm by Katy (not verified)

For the past 2 years, people in the industry have been talking about a meltdown like what we've been seeing in the news for the last week.   For the past few years, a substantial part of the American economy has been sustained by middle-class spending, much of it derived from refinancing mortgages, which in turn generated the Wall Street craze for manufacturing derivatives and other exotic off-the-books instruments (in part because hedge fund managers get to treat their percentage of the funds' profits as capital gains, not regularly taxable income).  

the bail-outs of today are the result of letting a market that rewards unequally scream down the tracks with no regulation whatsoever- the market had no way to measure the risk of the products being sold and the hedge funds were allowed to act as banks with no regulation or capital requirements whatsoever -- not a surprise that the financial markets shot off the cliff like WIL.E.COYOTE for a while before they realized there was no value in what they were holding.

 that is the thrust of the crony capitalism that Obama called out today--  even fiscally conservative individuals are now screaming that there is a DIFFERENCE between regulating the financial markets and creating regulations that restore trust in the financial markets-- meaning transparency in what you're selling, giving consumers an accurate way to value risk and taxing profits across the board in an equitable way.

so now i sit here in the office and field calls from clients who are realizing today that even though their company has lots of value, they can't meet the stringent values now required by the bank to renew their line of credit and they may have to file chapter 11.  these people played by the rules in the capitalist system and they are getting screwed because of the total abdication of responsibility from this administration in letting special interests get their piece.  crony capitalism indeed. 

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