A derivative is a derivative is a derivative

THE SUBJECT OF today's lecture, class, is the United States of Wall Street, in which we will explore the nature of, um, derivatives. Inasmuch as I don't have any idea of what I am talking about, I feel quite qualified in dealing with the subject. That is also true, I fear, of everyone in America except corrupt Wall Streeters and their lobbyists who are in the game solely for huge profits.

Wall Street, you should know, is the metaphor for tall luxurious office-like townhouses in lower Manhattan whose shadows so darken the street at the base of the ravine below that it would lead one to walk through the wrong door on an otherwise sunny day. Worse yet, few people, except those who have studied the ways of the Medici, Midas, Louis XVI and Shylock, are documented to entered the thick carpeted offices somewhere up the elevators. Wall Street loves shadowy mysteries as purposefully complicated as Rubik's Cube.

But we were going to talk about derivatives, weren't we? My pocket dictionary tells me that it is a "financial instrument" and it is really nobody's business how, say, Goldman Sachs, got away with making huge profits from gypping other people by "'betting" with the house odds in its favor while armies of unsuspecting investors lost everything in the rigged transactions that guarantee the sellers risk-free profits.

When I asked a banker to amplify the definition, he told me to "hush", adding that not even he fully understood how derivatives worked because like everything else these days, they were created in a remote province of China. "All you have to know," he said, "is when to buy long and when to buy short," which added nothing to my understanding of investment banking.

One of the problems as information tumbles out of Goldman is that so much of the vocabulary appears to be coded, as with a military invasion disguised with words to confuse the enemy. For example, you can go the "vanilla route," or the "exotic" route in your in investments (don't hold me to this!) or lean on someone who professes expertise in "structured product trading". After awhile, you may find yourself looking for MBA partners in a penny ante game with their hands always on the table.

There was a time when a lot more of us understood insider trading, which was nothing more than a broker with advance knowledge of a trade could...well, whatever he could do, to exploit the market.

Not anymore. With billions of dollars floating around in easy profits in those cash machines high above Wall Street, you need to know no more than the shortest distance from one trade to the next. Derivatives come in quite handy, but for the life of me, I don't know how.

There, now, has anything in today's lecture been helpful to you? A confession: I was going to mention hedge funds, but couldn't find anyone who could give me a hint.

Blankfein engaged in "God's work"

I HAVE THE FEELING that God has never been busier than He is today in taking care of the nation's business. His schedule was further burdened by Lloyd C. Blankfein, the chairman and CEO of Goldman Sachs who defended his company's modus operandi by insisting that Goldman Sachs was doing "God's work." Such heavenly labors included selling off securities with the thought that they would depreciate in value. Which they did. Boom.

According to the New York Times, Blankfein did concede that as a "market maker" Goldman Sachs was engaged in improper business and has reason to "regret and apologize..." Some, on the other hand, would simply call it plundering.

Blankfein's reference to his company's divine guidance followed closely upon Sarah Palin's gratefulness that God had led her to a great job at Fox News. Right. God and Roger

Ailes, whoever comes first over at the studio.

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his company was that

Was the mayor really raking leaves?

WEEKEND LEFTOVERS:

What? A whole week end passed and nobody called 911 to report that Mayor Plusquellic was seen in Halloween costume blowing leaves into his neighbor's yard?

The November issue of Harper's Index reports that the volume of the average human brain has shrunk 10 pct. over the past 10,000 years, which only partly explains Glenn Beck.

Connecticut Sen. Zelig (a.k.a. Joe Lieberman) is telling his critics that his waffling is really his effort to "do what's best for America." What would be best in his case is simply to get an offshore pizza route.

Since the National Football League has always been committed to parity among the teams, might it not consider giving the Browns 10 downs for each series - or, one per yard. It's a start.

A months-long study by McClatchy Newspapers revealed that Goldman Sachs, the Wall Street giant, quietly believed the housing market would crash as it was selling $40 billion in securities based on 200,00o risky mortgage loans. The scam has produced soaring profits ($50 billion plus in 2009, $20 billion in year-end bonuses) for the firm while its clients lost hundreds of millions of dollars and left countless homeless. It recalls the words of mobster Carmine Sabatini in The Freshman when he was questioned about his financial shell game:

"This is an ugly word - this scam. This is business. If you want to be in business, this is what you do."