The WSJ tells readers that: "Some lawmakers fear mandated clearing and higher capital charges could hurt small businesses that won't be able to afford customized hedging anymore." Yeah, right. This is what the politicians say. The secret that the WSJ apparently has not learned is that some (yeah, right, "some") politicians are not always truthful. They sometimes make arguments that do not reflect their real motives. For example, if they want to protect the big profit margins that Goldman Sachs, Morgan Stanley and the rest enjoy on customized derivatives, they might say that restrictions on these derivatives will raise the price so much that Joe's Diner will no longer be able to use them to hedge the price of hamburger meat. Even though they could not care less about Joe's Diner hedging the price of hamburger meat, it makes a much better story line that saying: "I'm worried that the loss of the customized derivative market will hurt the profits of Goldman Sachs and Morgan Stanley, who happen to be big contributors to my campaign." And hey, if you can get the WSJ to buy it, why not tell them about the risks to Joe's Diner?
--Dean Baker
