Are they simply our former anons come in from the shelter of nameless letters or what?

And here's the complete paragraph from Professor Roubini which contains that 'worst financial crisis' reference.

(emphasis mine.)

'By lending massive amounts to potentially insolvent institutions that it does not supervise or regulate and that may be insolvent the Fed is taking serious financial risks and seriously exacerbate moral hazard distortions. Here you have highly leveraged non bank financial institutions that made reckless investments and lending, had extremely poor risk management and altogether disregarded liquidity risks; some may be insolvent but now the Fed is providing them with a blank check for unlimited amounts. This is a most radical action and a signal of how severe the crisis of the banking system and non-bank shadow financial system is. This is the worst US financial crisis since the Great Depression and the Fed is treating it as if it was only a liquidity crisis. But this is not just a liquidity crisis; it is rather a credit and insolvency crisis. And it is not the job of the Fed to bail out insolvent non bank financial institutions. If a bail out should occur this is a fiscal policy action that should be decided by Congress after the relevant equity holders have been wiped out and senior management fired without golden parachutes and huge severance packages.'

A Generalized Run on the Shadow Financial System

Nouriel Roubini | Mar 17, 2008

http://www.rgemonitor.com/blog/roubini/249924

a example of deregulation that hasn't caused fraud, degradation of products/services, or other negative impacts to the economy?

I have recently been reading about a market in unregulated securities created by hedge funds and others that reaches $45.5 trillon. This market is called the "credit default swaps" market. It is, by all accounts, the biggest single market in the world, bigger than the U.S. stock market or the U.S. housing market, or U.S. Treasuries, or the Euro market, etc. It is completed unregulated and information-wise, completely opaque. Sometimes no one knows who the contra party is, and who would pay them!

These products seem to be highly leveraged, where a series of calls or defaults could bring the whole house of cards down. They are supposed to insure banks, brokerages, insurance companies and bondholders against loss.

Reagan/Clinton deregulation gone insane, brought to you by Bush 'regulators' and Wall Street.

Our government has provided tax-cuts for the rich, "trickle-down". At the same time, the economy has sustained itself on spending, "trickle-up". Now, the rich have money and all the rest have debt. It seems to me that the only way out of this mess is to pay-off the debt with "cheap money".

Can you spell h-y-p-e-r-i-n-f-l-a-t-i-o-n ?

If your goal is to 100% stamp out all corruption just execute all criminals w/o trial like they do in all those miserable broken nations. I'm for it. Lets turn the US into a fragrant mixture of Iran. North Korea & Cambodia.

who pays most of the taxes in this country?

The middle class and poor. The wealthy have tax shelters and historically low taxation on financial transactions.

If part of that net is the bankrupt Social Security program, let's start carving.

Social Security isn't bankrupt.

there are plenty of grossly mismanaged "safety net" programs that are sucking us dry

No, there aren't. Third strike, you're out.

Not the same situation.

Don't we need two quarters of negative growth for a recession. We haven't reached that milestone yet, never mind a depression.

All I know is beach houses on the shore are down 40% from last year, meaning someone other than a hedge fund managers can afford to sit near the ocean. That's a good thing!

and the other PNAC types wanted? To spend, spend spend (cue: Iraqi war) and bankrupt the federal government, so it could be drowned in the bathtub? When you bankrupt the federal government, however, you take down what's left of the middle class and create an even larger underclass ...

Which in a fantasy world might be ripe for revolution.

I'm a service technician, repairing equipment used by other businesses. I called in this morning, and was told it's going to be another day off. There were no calls on Monday, but yesterday, I worked 7 hours, and was sure this was the turn around, the day when things got back to normal, 40+ hours, like they've been for over 30 years without fail.

The sun climbs into the clear blue sky, mid 80's again today I'm told. I haven't had 40 hours in over 8 months now, and old timers said they've never seen it this bad. I've cut back on everything, and it seems there isn't much left to cut.

I pick up my fishing rod and gear bag, and head a couple blocks to the bridge, one of three onto my little island home in the Gulf. I'm glad my kids are grown, I couldn't feed and clothe them now. Young families must be frantic.

The bait hardly makes a splash as it enters the clear, blue water. Pelicans cheer me on from their perch nearby, dreaming of scraps and small fry.

I scan the area under the bridge, looking for any inviting crevices, wondering if I'll soon be calling it home.

Mr. Leonard's analysis fails victim to the Fallacy of Composition. No proof is offered that rising income inequality contributed to the Great Depression, and no case can be made that similar income inequality today puts us in danger of a rerun. It is better to make the case against high income inequality on the grounds of social justice than to attempt to prove it using flawed economic analysis.

The tax system certainly can be used to level incomes without significant economic harm. (I suspect that the Laffer Curve argument is true only at very high marginal tax rates, say 70% or more.) But there will be plenty of time to raise taxes on the wealthy once the current mess is behind us. It would be highly irresponsible to raise rates in the context of a credit crunch and GDP contraction. The "Roosevelt Recession" of 1938 proved that. Or as Nixon said, "We are all Keynesians now."

Finally...It is not possible for regulation to forsee every wrinkle in financial instruments. Handing broad powers to the Federal Reserve to intervene in the "shadow" banking system as well as with member banks seems to be a good way to catch trouble before it becomes a crisis. Combining the SEC and the CFTC makes intuitive sense because a great many firms are involved both in securities and commodity trading. I'd not call it dismantling the New Deal so much as bringing it up to date. The repeal of Glass-Stegal some years ago may well have been a mistake. But that is an essay in itself.

-Ted Faraone