How Much More Evidence Do We Need?

As the Madoff scandal unfolds, what is becoming evident is that the largest fraud ever perpetrated in the US financial markets was never detected by the government regulatory agency charged with preventing this kind of thing: the Securities and Exchange Commission. Why? Because it has been so weakened by the presidential appointment of top officials who do not believe in the need to regulate and by Congressional laws that have greatly weakened the regulatory framework.

The SEC had abundant warnings: “Madoff Securities is the world’s largest Ponzi Scheme,” Mr. Markopolos, wrote in a letter to the U.S. Securities and Exchange Commission in 1999.” (from WSJ, Dec 13, 2008. Mr. Markopolos worked at a Wall Street firm that competed with Madoff.)

Transparency in the financial sector has always been resisted by disreputable firms and pro-business administrations, who prefer to keep their dealings secret. To achieve transparency requires effective and intelligent regulation. But the global economy has been on a deregulatory trend for the past 30 years, ever since the election of Ronald Reagan. The Gramm-Leach-Bliley Act (GLBA) passed by Congress in 1999, allowed commercial and investment banks to consolidate. In the vernacular, this basically allows banks to get into the stock market. Its passage effectively repealed the 1933 Glass-Stegall Act, which was enacted to prevent precisely that activity, because that was a primary cause of the 1929 stock market crash and consequent Great Depression. How little we have learned!

In economic theory, the financial sector is supposed to act as a fiduciary channel that allows society’s collective savings to be used for investment in the real economy. When the financial sector starts to act like an out of control casino with outright fraud run in plain sight for years, and has become so swollen in size that the collective outstanding capital dwarfs the real economy (such as the deriviatives markets now do on a global scale), it is a case of the tail wagging the dog; it has corrupted its economic function and its effect on the global body is like a cancer that must be controlled or eliminated — or death can be the result. The results from this rampage of deregulation are tragic, devastating and have yet to fully play out; clearly, it will take years upon years to recover from the damage that has been done. We need no more evidence: the financial sector deserves to be restructured and re-regulated immediately, before it is allowed to wreak more havoc on communities all around the globe. The culture that dominates this industry is based on ruthless greed that is killing the planet, undermining our communities, perpetuating economic theft that extracts wealth from the lower to higher income classes on an international scale, perpetuates a violence towards the environment and marginal cultures, and strangles the ability of democracy to function with its connections and lobbying. Enough is enough! Make your voice heard and contact your congressional representatives today; or better yet, go to and make your input heard directly.

Open Source Government

The open source movement has revolutionized the software industry. [insert overwhelming citations here…]

Governments the world over are in dire need of assistance and input from the public to help support politicians with the courage and leadership to stand up to the influence of corporate lobbyists. [insert even more overwhelming citations here…first and foremost:]

In turn, the public needs current, up-to-date information about the economy and status of political issues from the government — which only the government can collect, organize and authorize — in order to stay informed on these complex and interwoven topics.

Enter the open software movement. The programmers who make it run will be inspired to help — if the way is made clear to allow them to contribute. Keep code open and secure!

Online citations:
Steady-State Economics by Herman Daly

[more to follow….]