Mind Over Market

Full Text Follows: What Went Wrong By Robert Stowe England Remarks Made at a Book Signing at the Federal Street Gallery in Milton, Delaware November 5, 2011 Good day. My name is Robert Stowe England and I’m here today to shed a spotlight on the causes of the financial crisis of 2008. If you are like me, when this crisis broke, you were shocked and outraged that things could get so out of hand and cause such an enormous calamity – the worst financial crisis of modern times. Something had gone terribly wrong to deliver us into the world of Mad Max, where the norms we thought necessary for society have vanished. We saw financial institutions crashing all around us while authorities seemed powerless to do anything about it. As a financial journalist, I covered the mortgage industry at the heart of the crisis. I was on the frontlines reporting a multitude of institutional and market failures that began to unfold early in 2007. By August 2007, fully half the mortgage market had collapsed or...

Congress should compel over-the-counter (OTC) derivatives dealers to publish monthly the pricing models they use or register the models with the Securities and Exchange Commission, says risk analyst Christopher Whalen. Such disclosure will, he contends, reduce the complexity of derivatives. Even so, an outright ban would work better to eliminate the "horrible damage" they have inflicted on the global financial system, he argues in responses to 33 questions submitted by the chairman and ranking member of a Senate panel following his testimony last month. In his answers to Senators' questions, Whalen also opposes the agreement between the New York Fed and the derivatives dealers to clear trades through the Intercontinental Exchange (ICE), a start-up he says is controlled by the banks and which shares half its profits with the banks. This agreement, while ostensibly putting in place a necessary clearinghouse mechanism, fails to run trades through an independent exchange, suc...