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Matt Taibbi and Yves Smith: How the Wall Street Mafia Holds America -- and the World -- Hostage

Yves Smith and Matt Taibbi join Bill Moyers to discuss our criminal global financial system.

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Bill Moyers: There's a definition of a sociopath as being radically deprived of empathy. Do you see characteristics of sociopathic behavior on Wall Street?

Matt Taibbi: Absolutely.

Yves Smith: Yes.

Matt Taibbi: I'm sorry, just what Yves was talking about with, you know, the old people who were dying earlier now, people who don't have kids, who aren't going to school, garbage that's being left in the streets. That's all because some guy was sitting up in a skyscraper in Wall Street and knowingly selling some communities, some municipality a fraudulent, toxic mortgage backed security.

I mean, he knows that that instrument is going to blow up in, you know, six months, a year. But he's selling it to them anyway. But he doesn't care, you know, because he can't see it, you know? I think in the eyes of a lot of these guys if they can't see the effect, it doesn't really exist. And to me, that's classic sociopathic behavior when you're blind, you're willingly blind to the consequences.

Yves Smith: I mean, it's really the growth of the trading culture. You know, in the old days, I worked on Wall Street when Wall Street really was only criminal around the margins. I mean, you really, Goldman Sachs in those days had the expression long-term greedy which meant you didn't kill the--

Bill Moyers: Long-term what?

Yves Smith: Long-term greedy. That they were long-term greedy. And that meant you didn't kill the goose that laid the golden egg. You know, you wouldn't put your customer into egregiously bad deal. If you took a little extra, you only took it when the customer was making money, too, so if they ever figured it out they wouldn't be really upset.

That attitude has changed completely. And I attribute it significantly to the growth of derivatives. Over-the-counter derivatives where you can't see the price on an exchange. You can't see the history.

And they're much more complicated. And those started growing really in the early '90s and became, and it becomes very interwoven in the practice of finance. Because the derivatives are so complicated, you can't price compare. The risks are often bundled in within formulas that the buyers can't understand. And so they can load all kinds of basically what's equivalent to hidden fees in these things by the way they structure the risks in the terms.

So they're the perfect vehicle for stealing because you're selling, no, you're selling somebody something they can't evaluate.

Bill Moyers: When you come back, I want you to take the whole hour and explain to me what a derivative is and how it works. Okay? Is that a promise?

Matt Taibbi: Absolutely.

Bill Moyers: Alright, Yves and Matt, thank you very much for joining us.

Matt Taibbi: Thank you.

Yves Smith: Thank you.

Veteran journalist Bill Moyers is the host of “Moyers & Company,” airing weekly on public television. Check your local listings. More at www.billmoyers.com. Matt Taibbi is a writer for Rolling Stone . Yves Smith is the creator of the finance and economics blog Naked Capitalism.

Yves Smith is the founder of Naked Capitalism and the author of 'ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.'