Call it what it is. The BUSH RECESSION. (page 3)

sammielee24

Speaking to a 91 year old woman today and she fully believes that she is reliving the beginning of the depression.....and I agree, the days of capitalism as it once was - are gone. sammieswife.

beksbks

the days of capitalism as it once was - are gone. sammieswife.

The deregulators and tax cutters have ruined a system that worked. Hopefully it's not too late to retrieve the true American Dream.

SacrificialLoon

This is not a recession. It is the end of capitalism.

Indeed comrade.

http://www.youtube.com/watch?v=f2-zzmCmMVI

Such a catchy tune. The poster of the kid with the violin makes me sad.

hamilcarr

This is not a recession. It is the end of capitalism. deregulation.

It is the end of something. That there was a comprehensive deregulation of financial services in the US over the last few years is a myth, quod erat demonstrandum ut Barca (and he still refuses to accept). Also, the system that has existed to now is not free market capitalism, but a mixture of state and private control. This sort of plutocratic relationship can never last. It actually amounts to a sort of fascism. The one perverts the other, and the other subverts the one. As there should seperation of Church and State, there should also be separation of Economy and State.

Mises: "There is simply no other choice than this: either to abstain from interference in the free play of the market, or to delegate the entire management of production and distribution to the government. Either capitalism or socialism: there exists no middle way."

Barca, atcque res publica delenda est.

BTS

watson

The Bailout Mascot

SacrificialLoon

That there was a comprehensive deregulation of financial services in the US over the last few years is a myth

In 1982 the Depository Institutions Act was a sweeping deregulation of the S&Ls, several years later the S&Ls collapsed under too much debt.

In 1999 Financial Services Modernization Act was passed, and the repeal of Glass-Steagal deregulating the banking industry, add to that the free market idealogues that Bush placed in positions that simply refused to enforce existing regulations, and you have the current collapse of the over leveraged financial industry.

Until human nature changes a free market paradise is just as unatainable as the worker's paradise depicted on those propaganda posters in that video I posted. Much to the chagrin of the altruists you'll always have the narcissists who will take whatever they can simply because they can whether they're in government or private industry. If everyone were altruistic it would work, but we're not, so we need rules, regulations and the threat of punishment to keep society together.

hamilcarr

quod erat demonstrandum ut Barca

Demonstrate me Gramm/Leach/Bliley was not an act that deregulated the financial sector.

Barca, atcque res publica delenda est.

That's a very childish statement. Dismantling the res publica has led to a concentration of economic power. Its power should be extended to undo the wreckages of decades of neoliberalism.

BurnTheShips

In 1999 Financial Services Modernization Act was passed, and the repeal of Glass-Steagal deregulating the banking industry, add to that the free market idealogues that Bush placed in positions that simply refused to enforce existing regulations, and you have the current collapse of the over leveraged financial industry.

No, I do not see where this follows. Only misguided or uninformed people take the position that this was exclusively evil big business operating in an absence of regulation. Only certain aspects of Glass-Steagal were undone (in reality originally a political attack of the Rockefellers on the Morgans), and not all provisions. Also, please show me where there has been a deliberate refusal to enforce existing regulations by the previous administration. I myself am not aware of any such instances.

Public regulation and intervention in mortgage markets along with unsound monetary policy is at the root of this problem. The real cause of bank failures has been Fed sponsored credit inflation and regulation. If FNMA and FHLMC, both quasi governmental organs, had not been buying up all the debt, would banks have gone out on a limb so much? They were divorced from the risk. For the banks to work, there should be strict liability. There is no such thing today, and the bailouts prove it.

Had the interest rate not been regulated by the Fed, had the regulated money supply not been inflated, had numerous initiatives from regulatory bodies encouraging home ownership at all costs not been enacted, none of this would have happened. If the current financial system were replaced by a 100 percent gold standard and a 100 percent reserve based (no fractional reserve banking) competitive banking industry, with no Fed or other central bank, we would have a sound money system with no more boom/bust credit based business cycles needing bailouts at the taxpayer expense.

If everyone were altruistic it would work, but we're not, so we need rules, regulations and the threat of punishment to keep society together.

The threat of failure is a punishment. Liability is a punishment. The punishments of poor decision making that naturally exist in a free market have been withheld from the banking system. What we have now is what results.

BTS

BurnTheShips

It is interesting to note what the libertarian member of Congress Ron Paul said about Gramm-Leach-Blilely in 1999 when it was under consideration. How extremely prescient. Banks are insulated from the risk of their decisions. They are not allowed to fail. This is a regulatory policy that creates a moral hazard, and is one of the reasons for the failure of the banking system. Read the whole thing. It is eye opening.

http://www.house.gov/paul/congrec/congrec99/cr110899-glb.htm

CONGRESSIONAL RECORD: Nov. 8, 1999

CONFERENCE REPORT ON S. 900, GRAMM-LEACH-BLILEY ACT

------------

HON. RON PAUL
OF TEXAS

[Page: E2297]

Madam Speaker, today we are considering a bill aimed at modernizing the financial services industry through deregulation. It is a worthy goal which I support. However, this bill falls short of that goal. The negative aspects of this bill outweigh the benefits. Many have already argued for the need to update our financial laws. I would just add that I agree on the need for reform but oppose this approach.

With the economy more fragile than is popularly recognized, we should move cautiously as we initiate reforms. Federal Reserve Board Chairman Alan Greenspan (in a 1997 speech in Frankfurt, Germany and other times), Kurt Richebacher, Frank Veneroso and others, have questioned the statistical accuracy of the economy's vaunted productivity gains.

Federal Reserve Governor Edward Gramlich today joined many others who are concerned about the strength of the economy when he warned that the low U.S. savings rate was a cause for concern. Coupled with the likely decline in foreign investment in the United States, he said that the economy will require some potentially `painful' adjustments--some combination of higher exports, higher interest rates, lower investment, and/or lower dollar values.

Such a scenario would put added pressure on the financial bubble. The growth in money and credit has outpaced both savings and economic growth. These inflationary pressures have been concentrated in asset prices, not consumer price inflation--keeping monetary policy too easy. This increase in asset prices has fueled domestic borrowing and spending.

Government policy and the increase in securitization are largely responsible for this bubble. In addition to loose monetary policies by the Federal Reserve, government-sponsored enterprises Fannie Mae and Freddie Mac have contributed to the problem. The fourfold increases in their balance sheets from 1997 to 1998 boosted new home borrowings to more than $1.5 trillion in 1998, two-thirds of which were refinances which put an extra $15,000 in the pockets of consumers on average--and reduce risk for individual institutions while increasing risk for the system as a whole.

The rapidity and severity of changes in economic conditions can affect prospects for individual institutions more greatly than that of the overall economy. The Long Term Capital Management hedge fund is a prime example. New companies start and others fail every day. What is troubling with the hedge fund bailout was the governmental response and the increase in moral hazard.

This increased indication of the government's eagerness to bail out highly-leveraged, risky and largely unregulated financial institutions bodes ill for the post S. 900 future as far as limiting taxpayer liability is concerned. LTCM isn't even registered in the United States but the Cayman Islands!

Government regulations present the greatest threat to privacy and consumers' loss of control over their own personal information. In the private sector, individuals protect their financial privacy as an integral part of the market process by providing information they regard as private only to entities they trust will maintain a degree of privacy of which they approve. Individuals avoid privacy violators by `opting out' and doing business only with such privacy-respecting companies.

The better alternative is to repeal privacy busting government regulations. The same approach applies to Glass-Steagall and S. 900. Why not just repeal the offending regulation? In the banking committee, I offered an amendment to do just that. My main reasons for voting against this bill are the expansion of the taxpayer liability and the introduction of even more regulations. The entire multi-hundred page S. 900 that reregulates rather than deregulates the financial sector could be replaced with a simple one-page bill.

Call it what it is. The BUSH RECESSION.

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