Thursday, June 12, 2008

2000-2008
WHAT HAPPENED TO OUR ECONOMY AND WHY

Outsourced jobs, loss of investment value in the stock market, rapid increases in gasoline and food prices, loss of equity in homes, foreclosures, inflation, steep decline in the value of the Dollar. Dramatic increase in national debt.

· Stock market bubble in 2000 burst (irrational exuberance!)
· Real estate bubble, led by sub-prime mortgages, burst
· Oil price bubble
· Food commodity price bubble
· Gold price bubble

A bubble is a result of unregulated speculation and possible manipulation in financial markets.

Why not regulate bubble speculation? We did … from the time of the Stock Market crash of 1929 until 1999, when a Republican Congress’ repeal (signed by Bill Clinton) of the Glass Steagall Act (that regulated financial markets and kept banks, insurance companies, brokerage firms, and investment banks separate from each other) allowed financial services to merge and removed regulations on speculation.

But the repeal didn’t happen overnight. From the days of Reaganomics, free market advocates … led by Alan Greenspan…, typically Republicans, “lobbied” Congress morning, noon, and night to deregulate markets… make them free markets. (“Free market” thinking asserts that free markets are best for economic growth.)

What is Congress’ record on deregulation? Congress has deregulated energy (can you say Enron?), financial services (do you still have a home?), airlines (the skies are not very friendly lately), and telecommunications (can you hear me???)

So let’s take a break for a story. I attended an executive management program at The Wharton School of the University of Pennsylvania. The professor explained that ultimate power (which I define as the ability to do what you want when you want to and get what you want when you want it) is the ability to change the rules!

So now it should come as no surprise to you that what has been described as deregulation is actually re-regulation…. changing the regulations by those who were supposed to be regulated to be favorable to them. Believe it or doncha, they actually wrote the legislation and paid (they call it contributions and such) senators and House representatives to vote it into law. Like making it more difficult (impossible) for people to file for bankruptcy or charging interest rates on credit cards that would embarrass the Mafia And now you know the rrrrest of the story.


Glass Steagall Act and Repeal
The Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) and included banking reforms, Other provisions which prohibit a bank holding company from owning other financial companies were repealed in 1999 by the Gramm-Leach-Bliley Act. [1]
On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One of the effects of the repeal was to allow commercial and investment banks to consolidate. Several economists and analysts have criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis. [6] [7]

This article may require cleanup to meet Wikipedia's quality standards.Please improve this article if you can. (April 2008)
Losses at financial firms from the mortgage collapse may eventually triple to $600 billion as defaults on home loans grow, says Zurich-based UBS AG. One reason banks are losing money is the repeal nine years ago of the 1933 Glass-Steagall Act, which separated commercial and investment banking after excessive risk- taking contributed to the Great Depression, Eveillard said.
The repeal enabled commercial lenders such as Citigroup, the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities.
Citigroup, which has fallen 36 percent since reporting in January the biggest quarterly loss in its 196-year history, may have writedowns of $15 billion this quarter, according to New York-based Merrill Lynch & Co. That would add to the $22 billion that Citigroup already lost because of the housing slump.
Citigroup played a major part in the repeal. Then called Citicorp, the company merged with Travelers Insurance company the year before utilizing loopholes in Glass-Steagall the allowed for temporary exemptions. With lobbying led by Roger Levy, the "finance, insurance and real estate industries together are regularly the largest campaign contributors and biggest spenders on lobbying of all business sectors [in 1999]. They laid out more than $200 million for lobbying in 1998, according to the Center for Responsive Politics..." These industries succeeded in their two decades long effort to repeal the act. Also, "The newly formed Citigroup announced only days after the deal that it had hired recently departed Treasury Secretary Robert Rubin as a member of its three-person office of the chairman."
[8]
``Glass-Steagall protected bankers against themselves, Eveillard said. ``Bankers are sheep. They don't mind going over the cliff if everyone else goes over the cliff.

Monday, June 02, 2008

THE DEM’S “RULES” COMMITTEE


How many of you spent a few hours this past Saturday watching the Democrat Party’s “Rules” Committee deciding what to do with the delegates and super delegates from Florida and Michigan? Come on now ….raise your hands. Good. Then you have to be as ambivalent as I am… amused and horrified. In a way, I feel like I watched the unfolding of a modern day Dicken’s novel with Mr. Icky (a truly apt name) knitting the names of Dems who dare defy his candidate into the cloth of deception.

Political parties… are they good or bad for democracy? Our democracy is still only a work in progress. With the grand prize of incredible power, we can always count on the political parties, who took control of our government away from the electorate, to try to rig the game. For many decades, the parties relied on and took advantage of well over 50% of eligible voters’ belief in the “Just Ruler Principle” (Just Ruler says, “I don’t care who the ruler is or how s/he gets there as long as s/he is just.” It is fundamental to explain why so many citizens of non-democratic countries aren’t enthusiastic about installing a democracy.) Blend in data mining and a political party can identify and control its “base” and use its campaign funds to target a relatively small number of swing voters. The Republicans executed that strategy to perfection in 2000 and 2004.

But the unusually large turnout the midyear election of 2006 was repudiation of the Just Ruler Principle; thanks to the inept mistakes and abuses of power by the Bush Administration and the Republican controlled Congress. Many voters now realize that the system cannot be counted to produce a Just Ruler. Furthermore, the unprecedented turnout of this presidential campaign underscores how the Bush years have made the electorate abandon Just Ruler, with the consequence that the party leadership is having trouble controlling the outcome, i.e. McCain and Obama respectively. By god, we, the electorate, may actually be taking some control of the process away from the party hierarchy and we may be getting a little closer to the promise of democracy.

Finally, a statement from Bush we can all get behind:

“Some seem to believe we should negotiate with terrorists and radicals, as if some ingenious argument will persuade them they have been wrong all along.”

And what "ingenious argument" will persuade the PLO terrorists ("Palestinian Authority"), who pretend to negotiate with Israel, to give up their belief that Israel should not exist at all? Don't pay attention to what people say.... only to what they do. What has the PLO ever done to make any objective person believe that they will honor any agreement with Israel? Anyone.... anyone?? Then did Annapolis make any sense at all?
Hellooooo, ....McFly!