From The Financial Policy Forum's Derivatives Study Center Comes the Cry of Fire in the Theater

What a comprehensive, erudite and self-aware document.

If there was ever a "must read" piece that validated this blog's concerns over unregulated hedge funds and their capacity to create massive, unsustainable systemic risk, this is the one.

It shall of course be ignored by everyone in a position to do anything, given that the crooks run the system now - quite literally, from what I can tell.

It's the S&L crisis all over again. Criminals destroyed the thrift industry in a few short years, the depth of their greed knowing no limits, their brazen obviousness undiminished by any regulatory or legal fears - they owned all the politicians they needed to, and spread their money around well.

Interestingly, the S&L crisis was also an opportunity to see Greenspan in action, as he praised the most criminal and overtly compromised of the bunch as triumphs of the new order - brave innovators crafting a new new thing in banking.

Of course, we now know that it was an old, familiar thing they were crafting - the robbery of a nation. That so few got so far is also reminiscent of BCCI, where again, a troubling intersection between Wall Street and the Beltway was in evidence, and favoritism went hand in hand with money laundering, terrorism funding, narco-financing, outright theft of billions...all while our top officials did squat, ignoring the warnings of Ed Gray, preferring to mock and demonize the man.

Those are going to be looked back on as the good old days once the lid blows off the naked short selling crisis. If I am correct, and a large percentage of all trading is nothing more than institutionally-sanctioned fraud, covered-up by regulators and perpetrated by the icons of the industry, then a significant chunk of the GDP is being stolen every year, exchanged for valueless chits destined for an ugly and worthless end.

That isn't a market. It is a criminal enterprise.

You've been reading about it here for several years, and yet the media band continues to play on as the ship closes on the iceberg. It isn't that the info isn't available, or that it is particularly obscure.

It is that powerful special interests will stop at nothing to keep their illegal scam bilking the nation. Personal safety, economic Armageddon, the destruction of the American experiment...there are quite simply no stakes too high, or damage too great to inflict, for the predators who have co-opted the system.

Here, in black and white, is the debunking of all the tired arguments advanced by the puppet-spokespeople, the talking-head lapdogs eager to please their masters for tiny scraps from the table.

It's been a long week. If I sound disgusted, it's because I am. Knowing the whole enchilada is chilling.

If you share my disgust, and want to do something, take some time out, and propagate this blog and the important work that is its topic.

Knowledge is power. Without a few key bloggers, and a few very brave leaders willing to risk everything to right this ship, most wouldn't have a clue.

How many CEOs are out there right now, completely aware of how bad this is, but too cowardly to stand up to the crooks? Quite a few, I'll bet. And yet they understand that if they do the right thing, they are likely to be mowed down by the predators, as an example to others who would rebel. Exactly as the miscreants did in the 1920s to the few who stood up to the crookery then - the system ultimately destroyed them, even as they tried to combat the manipulations that would ultimately plunge the globe into depression, and cost millions their lives and financial futures.

Legislation emanating from that period attempted to stop the madness, and rein in the worst of the abuse via the creation of some common-sense rules governing the markets - to be applied by a new regulator chartered with investor protection as its overarching concern.

Those rules and laws, the 1933 and 1934 Acts, are scarcely recognizable now. The regulator has so bastardized and abused the clear intent of the Acts as to render them meaningless. Rules have been propagated that conflict with the clearly articulated guidelines. Exemptions for legions of predatory miscreants abound, predicated upon the debunked notion that "liquidity" is more important than investor protection.

Here's a newsflash. It isn't - not to investors. It is to the miscreants who get paid from more trading, and who can hide behind the opacity created by systems constructed wholly for speed, without regard for safety.

I have never been more cynical or pessimistic about our future as a nation.

Having said that, I do believe there will be opportunity over the coming decades. It just won't be in the US equity markets, which have ceased to even vaguely resemble a fair system.

I also believe that there is going to be a place for a meaningful challenge to the regulatory system. If the physicians won't heal their patient, the courts will. Stay tuned for more on that. I've been pushed to run more ads, a la Washington Post NCANS, or write more Amicus briefs, also a la NCANS, however I think the time is rapidly approaching for a showdown with a more definitive call to action. My colleagues in NCANS agree. And the elves are again at work.

But this weekend, rest, read this remarkable document, email the author if it resonates with you, and share it far and wide.

The battle will be joined again next week. For now, read, think, and recuperate. We have a ways to go.