Breaking Down the Jargon: Leverage, Derivatives, and Further Proof that America Needs Financial Reform

While I'm going to leave the explanation of the dangers of leverage to Ezra Klein and derivatives to Cenk Uygar, I just wanted to comment on the fact that these convoluted issues are exactly why the Invisible Hand fails. A free-market system is said to regulate itself because consumers will make the best decision and those offering bad deals will either go bankrupt or change their policies to meet consumer demand. Instead of facilitating consumer understand, the financial industry intentionally creates complicated jargon that reads like a foreign language to the average investor or credit card holder. Is this ethical? Of course not, but these groups are just being "socially responsible" to their stock holders by trying to earn as much money as possible. In other words, corporations are claiming to make those rich enough to invest in them wealthier by exploiting the limited financial literacy of the average American. If this sounds like its creating greater fiscal inequality, it's cause it is. And of course, when this fraud works, company executives are obligated to compensate themselves to the tune of multi-million dollar bonuses for successfully deceiving their customers.

Yeah... financial reform is necessary. As long as corporate greed exists, regulation will be needed to protect the consumer.



Let me digress from the issue at hand by saying that in this exchange on financial reform with contract lawyer Elizabeth Warren, Colbert shows why he is 1000x better at interviews than his former master Jon Stewart. He channels his charisma into the interviewee while still provoking stimulating and informative discourse. Even if this point is defended by the fact Colbert creates pseudo-debates because of his satirical conservative persona, its still much better TV.

Alas, enjoy!