Earlier today (Sunday) I had the following exchange with a friend in high places on Wall Street.  Let’s call him Jesse.

LK: Are the Federal Reserve and Federal government mandated to prop up the financial markets?  I think the X factor we were talking about last week, that’s made getting a handle on market movement nearly impossible, is the transition of a relatively free market economy into a murky swamp with little visibility, due to abuses of the system.  If the leverage (30 times assets on hand in some cases) that’s having trouble being unwound wasn’t illegal, it certainly wasn’t prudent or responsible by any measure.  The pigs should get slaughtered.

It’s unfortunate in the extreme that the mid and lower level employees of the reckless firms, as well as John and Jane Q. Public that hold stock in them, have to suffer.  Wish there was a way to surgically remove the gluttons and separate them from their assets.

Jesse: We’re witnessing the peril of extreme capitalism (aka greed by the few who control the companies) .  We all bought into the system because even the 2 bit real estate broker enjoyed his 6 percent commish triggered by financially engineered (no money down) mortgages and a high velocity of transactions.  I don’t know how it plays out.

LK: The real estate agent at the bottom of the food chain was like the street junkie or nickel bag dealer being enabled by the Medellin Cartel.  We agree that the greed ran up and down the ladder.  Now the ladder tips and everyone falls.

On a whole lot of innocent bystanders.

note: Jesse’s more than a real smart guy.  His admission of not knowing the outcome is a reflection of his wisdom.  The gurus who have been strutting their stuff in the financial media making grandiose predictions, in the hopes of being the broken clock that’s right twice a day, are the court jesters.