This excellent post by Janine is a perfect summary of the true cause of the Economic Collapse.  I first learned about the Derivatives issue when I watched the Documentary, The Obama Deception. A portion of that movie was focused exclusively on this issue.  The whole movie is hosted below and the clip about Wall Street is above.  I don’t agree with all of the claims of this movie, but it does tend to make you think.

Here is the final portion of Janines piece:

“With journalists stumped, could anyone in the Washington power “village” stand in the way of runaway derivatives, and the banks that wanted to keep them unregulated? Ironically, there were few policymakers more capable of understanding derivatives or their real world impact than Clinton Treasury Secretary Robert Rubin and his deputy Lawrence Summers. And both were there when derivatives could have been at least partially reined in before they became, to quote Warren Buffett, “financial weapons of mass destruction”. Instead they did exactly the opposite, blocking key regulation at pivotal moments, as we saw in Summers’ remarks above, with Rubin going on to benefit from this deregulated Wild West when he left Washington and returned to Wall Street as a top executive.

Here again, taking an anthropological view can be instructive. Consider the elite conclaves both came from, and the biases and potential conflicts attached to them. Rubin originally came to Washington after decades at Goldman Sachs, a firm renown for its culture of invincibility. Summers came from a somewhat similar culture – Harvard – with ample faith in both himself and the efficacy of the free market.

Their boss, President Clinton, was intent on being the pro-business “New” Democrat. In the last two months, all three have tried to distance themselves from their roles in letting derivatives go unchecked. (And in true shadow elite fashion, none of them have faced the consequences of their actions. In fact, the only ones to really suffer from the failure of the elite are the non-elite, millions of regular people who’ve lost their jobs, houses or savings.)

And derivatives remain unchecked. Just because the economy cratered doesn’t mean that all these money-printing machines have disappeared. According to calculations by Bernstein Research, Goldman Sachs could lose 41 percent of its profits if the new derivatives regulations pass. Banks generally don’t break down their figures on this part of their business (surprised?), but it seems fair to estimate the percentage of the bank revenue that comes from derivatives is solidly in the double-digits (at some it could be more than 50%) To put this in perspective, imagine a food company that gets half its revenue from selling products that go totally unregulated by the FDA, and whose practices are hidden from both regulators and journalists.

Tett notes sociologist, philosopher and anthropologist Pierre Bourdieu as arguing,

“...elites …. invariably try to hang onto power–not so much by controlling the physical means of production, but by also dominating the cognitive map, or social discourse. What really matters …is not what is publicly discussed, but what is not discussed. Social silences, in other words, are crucial.”

Her message: when the people in power insist a little too hard that there’s no story to be found, start digging in. Tett says this should be a wake-up call for journalists and anthropologists, to question the people drawing that cognitive map. One reviewer dismissed this as “preachy” advice. It might be, if she wasn’t dead right.

Linda Keenan edits the Shadow Elite column.”