Glass Steagall Reprise?
NEW YORK (TheStreet) — In an attempt to garner fawning headlines by addressing the government’s problem of regulating large banks that are “too big to fail,” four U.S. senators on Thursday proposed to bring back the Glass-Steagall Act’s separation of investment banks from commercial banks.
The problem with the proposal is that it would actually make government bailouts of large banks more likely.
Oh really Cramer you douche? (Ed: Yes, I know your name isn’t down there as the author. But your ugly-ass mug is on the byline.)
Oh wait — you can’t.
Why not? Because the example we have, from the Depression to the 1980s, there weren’t any such examples as the system was stable for 50 years, ending only when the banksters corrupted the law.
…..That second quote shows hostility to investment banks, which actually provide a boost to the economy and employment growth, by helping companies and municipal governments raise money from investors.
“Investment banks” that are privately owned and cannot create credit, that is, forcible employment of “One Dollar of Capital”, raises money from investors.
What is done today does nothing of the sort.
Of course, the senators failed to add that Bear Stearns and Lehman failed because of the unavailability of the overnight loans they always relied on for liquidity. Completely separating investment banks from commercial banks means the investment banks will no longer have the stable sources of liquidity — deposits — that they have built up, in order to avoid another Lehman-like catastrophe.
Bear Stearns and Lehman failed because they lied about what they had as collateral and when that was exposed as dogcrap they found themselves with empty pockets.
To allow these institutions to steal depositor funds after they get caught lying is an abject fraud.
It is my position that this bill does not go anywhere near far enough because it does not put a stop to the unbridled credit creation unbacked by anything but hot air, and without doing that you will not have stability in the financial system. Only One Dollar of Capital does that.
But if you do impose that standard then the fraud of alleged “economic growth” that never really happened becomes impossible, the cranking of asset values higher based on nothing more than ever-increasing leverage ceases, value and price move toward one another and the only way to expand GDP reverts to what it should be — through actual innovation, improvements in production and discovery of new and better processes and procedures.
That would put all the glib-talking screwmeisters out of business in an hour, call a full stop to the screwing of the American public by the Wall Street mavens, and expose all the BS that has been run over the last 30+ years in our so-called “economy” for what it is — and that might lead the American public to reach for the boiled rope and employ it upon all the hucksters that have serially financially raped them for decades.
The push-back you’re seeing on CNBS and elsewhere this morning comes from the well-founded fear that should recognition of what the people who have employed these scams become widely understood those people might have a life expectancy shorter than that of a cockroach on your bathroom floor at 3:00 AM when you need to take a leak.
Turn on the damned lights.
Ps: For a full exposition on this read Leverage, or if you’re not into a nice, easy read on how you’ve been screwed for decades, just read the articles at this link.