Marko was/is right - Mountain Buzz

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Old 01-13-2010   #1
Self-Aggrandizing jackass
heliodorus04's Avatar
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Marko was/is right

From Robert Reich's blog today:

It has been more than a year since all hell broke loose on Wall Street and, remarkably, almost nothing has been done to prevent all hell from breaking loose again.

The only difference is that now the Street’s biggest banks know they are “too big to fail” and will be bailed out by taxpayers if they get into trouble – which means they have every incentive to make even riskier bets. And, of course, American taxpayers are out some $120bn, while millions have lost their homes, jobs and savings.

All could be forgiven if the House and Senate committees with responsibility for coming up with new regulations were about to come down hard on the Street and if the Obama administration were pushing them to. But nothing of the sort is happening. Yes, the White House has indicated interest in charging banks for the cost of the bailout, but this is not real reform; it’s just making up for some of the direct costs of cleaning up the mess.

The bill that has already emerged from the House is hardly encouraging. Dubbed the “Wall Street Reform and Consumer Protection Act”, it effectively guarantees future Wall Street bail-outs. The bill authorises Fed banks to provide up to $4,000bn in emergency funding the next time the Street crashes. That is more than twice what the Fed pumped into financial markets last year. The bill also enables the government, in a banking crisis, to back financial firms’ debts – a wonderful insurance policy if you are a bondholder. To be sure, the bill authorises the Fed and Treasury to spend these funds only when “there is at least a 99 per cent likelihood that all funds and interest will be paid back,” but predictions about pending economic disasters can be conveniently flexible, especially when it comes to bailing out the Street.

Nor have lawmakers shown any enthusiasm for resurrecting the wall that used to exist between commercial and investment banking. The Glass-Steagall Act, passed in the wake of the Great Crash of 1929, separated the two after it became obvious that commercial deposits needed to be insured by government and kept distinct from the betting parlour of investment banking. But Wall Street forced Congress to take down the wall in 1999, enabling financial supermarkets such as Citigroup to use its deposits to make all sorts of bets. Even Obama adviser and former Fed chief Paul Volcker has argued that the two functions should be separated again.

Nor is anyone talking seriously about using antitrust laws to break up the biggest banks – the traditional tonic for any capitalist entity that is “too big to fail”. Five giant Wall Street banks now dominate US finance. If it was in the public’s interest to break up giant oil companies and railroads a century ago, and the mammoth telephone company AT&T, it is not unreasonable to break up the almost infinitely extensive tangles of Citigroup, Bank of America, JPMorgan Chase, Goldman Sachs and Morgan Stanley. No one has offered a clear reason why giant banks are important to the US economy. Logic and experience suggests the reverse.
Now, in my own defense, I have long said that all societies are plutocracies (or perhaps I said kleptocracies).

I still can't read from those hystrionic sites that you do. I need more mellow in my life than I have in quite some time (which is why I post less).

The political scene is not willing to tackle the real risk to our common defense and common prosperity, which is the internal corruption at the national level (at a minimum).

And where Reich gets some things wrong, like bankruptcy changes and force-downs on mortgages (which will hurt the common person far more than help them), he's very right about the aggregate transfer of wealth from bottom to top. The whole thing makes me sad, and I'm rather giving up on politics.

The biggest problem remains to me the fallow political awareness of the American electorate (which is far smaller than the population). People don't care, for whatever reason, and so long as they don't, an individual's best bet is to work his way into an income level where he can be noticed and taken in by the plutocrats. So I urge all Americans simply to sell their souls (metaphorically).

"self-aggrandizing jackass" - it says it right on the label
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Old 01-13-2010   #2
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No question that this congress lacks the collective cajones to aggressively address "too big to fail." Repealing Gramm-Leach-Bliley and the Commodities Futures Modernization Act would be two very good starting places. Neither have happened. The White House and the Democrats bear the responsibility for this. The GOP wouldn't play anyway, much like they have obstructed any real reform to healthcare. It's depressing. As consumers, we can refuse to do business with the banks and investment firms that precipitated the collapse. That's a grassroots response to the Washington spinelessness that IS taking root across America.
You can never step into the same river; for new waters are always flowing on to you. - Heraclitus of Ephesus
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Old 01-14-2010   #3
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Marko was/is right
Thanks for the acknowledgment, Helio. I would love to brag about this one, but that would be like bragging to somebody that my view on the bottom-left side of the Titanic has a much better view than their right side... as the ship was sinking.

I'm very aware of the fact that I am in the same boat as you, my friend.

And, now, Deep thoughts by Jack Handy:

Don't look right or left for the answers...
you will only get sidetracked by the daily circus shows.
But if you do get sidetracked, don't fret
just remember to buy something... some popcorn, a soda and maybe even a car.
And don't worry... if you don't remember to buy something
Uncle Sam will simply just have to take your tax money to prop up a failing corporate business.
Ahhhh, ain't state-capitalism grand!
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Old 01-14-2010   #4
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Old 01-14-2010   #5
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I don't buy it. Although the banks are miserably pathetic, and indeed many of their executives should indeed commit suicide as Charles Grassley put it, there are still a lot of great innovative people who make this country great. Some of those people are even bankers... imagine that!! Hopefully we'll get on the right track soon with things like energy independence and health care that doesn't eat up our wages.
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