|
By kdtroxel
“We hang the petty thieves and appoint the great ones to public office.” --Aesop (~550 BC)
Is there a group of people who you can point your finger and say with defined outrage, that they are the ones responsible for the economic depression we are in now? The answer is, yes. The answer is our own federal government and one law in particular. ‘Gramm – Leach – Bliley Act of 1999’ did many things, it gutted one very important depression era banking act, it amended the Banking Act of 1933 (Glass-Steagall Act) which forbid banking institutions from issuing, speculating, and trading securities. Trading in securities is gambling in the sense that you are risking on an outcome with the investment of an asset or currency. When banks lose on their bad bets, such as valuation loss on created securities or stock declines, then the bank looses its minimum liquidity requirements and must be bailed out by the FDIC. From February 2007 to August 2010, there have been 292 bank failures requiring FDIC bailout to an accumulated tune of $69.5 billion dollars.
Why would congress write and enact a bill that removes such an important depression era financial safeguard? Several reasons, first, banking institutions wanted it and with $5 billion dollars worth of lobbyist effort and twenty years of persistence, got their wish. Second, congress thought that if they made banking exciting through the creation of a great whirling pool of cash, that it would create more jobs and money; well mainly money, then bailed out the bankers when their money pool ran afoul. Congress was locked into bailing out banks for if they allowed due process of FDIC reconstruction of the big banks, then the reason they went bankrupt would arise and indict congress for its participation. The system has been blinded by congress’s guilty heart, it obscures investigations, tosses snowball questions to perpetrators, appoints positions for those who participated, all while passing bailout funding with zero oversight. I am awed at the hardiness of the American Economy to continuously take blows from within the system and from without.
Over several decades congress has passed laws and incentives to ship American businesses and manufacturing to other countries where labor rates are cheaper. They found themselves in a bind with ever shrinking businesses to gain re-election funds. Creative banking seemed like the golden ticket, hence the passage of Gramm Leach Bliley Act of 1999.
Then in 2001, our deregulator hero was elected to the presidential office, George W. Bush. His motto was hands off government, the markets can self regulate, and with congress packed full of republican yes men, it was so decreed. Institutions such as SEC had their budgets decimated because businesses can self regulate. Many of Bush’s cabinet appointees were from the very businesses that they were meant to safeguard. In essence the foxes were in charge of guarding the hen house.
Also in 2001, congress responded to Wall Street bankers for even more gambling rights and enacted ‘H.R. 4541: Commodity Futures Modernization Act of 2000’, which was hidden along with twenty-four other bills in ‘H.R. 4577: Consolidated Appropriations Act of 2001.” Commodity Futures Modernization Act legalized credit-default swaps (CDS). This bill also made legal derivatives, which is a form of gambling upon assets that are not owned by the better. Derivatives can be hedged, which is likened to placing a side bet on your bet. In order to gamble on a grand scale, an entity needs large amounts of liquid assets such as cash. Banks can obtain Federal Reserve Notes/digital currency from the Federal Reserve Bank at ultra low interest rates of the Greenspan/Bush era, or create lots of marginally qualified loans and bundle them into collateralized-debt obligation (CDO).
A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box. Through some magical calculation, banks were allowed to trade CDO’s as credit-default swaps (CDS) at full face value, a valuation that was impossible to verify.
When the stock market crashed in September of 2008, which resulted on a massive amount of cash exiting the liquidity markets, banks felt hard pressed to justify their balance sheet asset valuations, thus fell short and required government assistance of fresh infusions of digital currency. The banker’s people inside the treasury department and Federal Reserve Bank drafted up a nice murky bailout bill with little to no strings attached; in essence congress gave fraudulent bankers fresh play money to bet and gamble, with little to no reporting or use requirements. The banker’s minion, Obama, pushed hard for fast quick and dirty enacting of the bailouts.
On June 23, 2009 @ 4:12 pm, Ron Paul, the popular Republican Congressman from Texas, was ripping into the president and Congress for what he sees as their “goal” with round after round of stimulus: complete economic collapse. “From their spending habits, an economic collapse seems to be the goal of Congress and this administration.”
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
