Why We're F*****d

I'm an avid listener of the BBC. Follow them online and today the BBC Worldservice is having a whole day of programs about the current crisis. The news is basically very simple. We're all f*****d. I would urge all of you to spend 30 min and listen to this program (you can download it from the BBC web site) and just in case you don't know what a credit default swap is and why you should care. Here's essentially what made the bankers "rich":

"Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counterparties to them. In the meantime, though, before a contract is settled, the counterparties record profits and losses – often huge in amount – in their current earnings statements without so much as a penny changing hands." Warren Buffett in his 2002 speech to shareholders (page 12)

Oh and here's what caused the current crisis - The Commodity Futures Modernization Act of 2000.

So onward to "Failure or Fraud"