The New York Times Covers the TPP: A Commentary

New Economic Perspectives has the article The New York Times Covers the TPP: A Commentary by Joe Firestone.

Wikileaks did us all another service yesterday by releasing the “Trans-Pacific Partnership Agreement (TPP): Investment Chapter Consolidated Text,” and collaborating with the New York Times to get the word out. Jonathan Weisman wrote the story for the New York Times. Apart from providing a very high level and very selective summary of what the chapter says, the article contains talking points used by proponents and opponents of the TPP. I think a close commentary on the article and associated issues would be useful.

My recent post ISDS is a bad deal for America – Part ot TPP “Trade” deal about what Elizabeth Warren said about this. If this wasn’t enough to scare the daylights out of you, then this article in New Economic Perspectives ought to do the trick.

I see a similarity in how this is being justified and fears about it allayed, to what happened in the recent real estate/mortgage/financial derivatives melt down.  I commented on this similarity at New Economic Perspectives.

This is similar to the justification for selling derivative packages of mortgages as being safe.  The proponents did a study of the entire history of mortgages that were created by the normal rules of prudence by banks in the past.  They determined that the rate of default would have to be so far outside of normal, that the likelihood of the derivatives’ failure would be extremely small.  Then as banks started selling these derivatives based on the principles of prudent mortgage origination, the whole reason banks used principles of prudence went out the window.  What was being sold were packages of mortgages based on no history at all for that type of mortgage.  Any ratings on these securities that depended on completely unrelated history was as phoney as a $3 bill.

I hope I have been able to convey to you the similarity and the danger it poses.  It is clear in my mind that the same results will ensue (economic devastation), but I can never tell if others see the inevitability of the same results.

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