Republicans Caused Second Great Depression; Democrats Want To Make Sure It Sticks

The Gramm-Leach-Bliley Act.  That’s your second Great Depression bitch, right there.  If you want to point a finger at what caused this massive recession (come on…it’s a depression) and massive 16% actual unemployment, you need look no further than Gramm-Leach-Bliley.  Those are the three idiots at the top of this article.  Their bill rendered the second part of the Glass Steagall act impotent.

The Glass-Steagall Act prohibited any one institution from acting as a combined investment bank, commercial bank, or an insurance company. The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms, and insurance companies to merge.

From Wikipedia:

For example, Citicorp (a commercial bank holding company) merged with Travelers Group (an insurance company) in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica, and Travelers. This combination, announced in 1998, would have violated the Glass-Steagall Act and the Bank Holding Company Act of 1956 by combining securities, insurance, and banking, if not for a temporary waiver process.^[1] The law was passed to legalize these mergers on a permanent basis.

Did you catch that?  Citicorp was formed illegally, and nearly every Republican Congressperson and Senator, instead of upholding the law, passed a law to bypass Glass Steagall.  It was the merging of commercial and investment banks into giant, too-big-to-fail banks, and the emergence of  AIG, and others that DIRECTLY caused the Wall Street meltdown of 2008-2009 and the current second Great Depression.

Republicans are voting against extending unemployment benefits, with certain of their members claiming that unemployment benefits makes people lazy and unwilling to work.  That should suit Republicans fine; it fits their job description to a tee, lest we forget the do-nothing Congress.

Republican contradictions never cease to amaze me.  They all vote to extend subsidies to oil companies to the tune of $38 Billion during the midst of a “deficit crisis”.  But they vote against extending unemployment benefits to the American unemployed because “we can’t afford to grow this deficit any larger”.  Nice contradiction, assholes.

Here are several solutions:

1.  Until unemployment numbers recede below 7%, we pay our Federally Elected Officials minimum wage without ANY benefits. That includes no fees for their staff, no travel vouchers, no free food at the Capitol Cafeteria…no nothing.  They need to suffer like the rest of America does.  I just don’t get the impression that this is urgent enough for them.  We need to make it so.

2.  Enforced retirement in the Congress and Senate at age 65.  That ought to create 450-600 jobs…at least.

3.  Move some of the 16 million unemployed temporarily to the Gulf Coast to assist in the oil clean up.  That this idea has not even been mentioned by either party is pathetic, to say the least.  If unemployment benefits are so onerous to Republicans, then they should be all for putting the unemployed to work.

Democrats do not get a free pass from me on this one, either.  Their current crap sandwich, the Financial Services Reform Bill, does nothing to reverse Gramm-Leach-Bliley.  In case you were wondering, America thrived under Glass Steagall for 65 years.  It prevented banks from getting too big and becoming “too important” to the economy.  Restoring Glass Steagall would bust up the very banks that caused the Depression, and ensure that it could never happen again.  But Democrats didn’t even mention Glass Steagall, and didn’t even try.  Instead, what they tell us is, “This is the best bill we can get in the current political climate”.

I am a monkey’s uncle.     Ω

Banks Too Big To Regulate Buy Democrats To Insure That Glass Steagall Stays Repealed

I was gently scolded the other day by democrats for being against a Financial Services reform bill that doesn’t go nearly far enough.  In fact, I support Senator Russ Feingold’s decision to vote against that bad bill.  One of the items missing from the bill is Glass Steagall safeguards.  According to Feingold:

“At the start of this process I made clear that I had a simple test for financial reform — will it stop another financial meltdown? This bill fails that test, and I won’t support legislation that fails to protect the people of Wisconsin from the pain of another economic disaster. And I don’t need to be lectured about this issue by people who supported the repeal of Glass-Steagall, which paved the way for this terrible recession.

I had hoped I would be able to support the legislation, given the clear need for strong reform. I cosponsored a number of critical amendments during Senate consideration of the bill including a Cantwell-McCain amendment to restore Glass-Steagall safeguards.”

I was told by Democrats that no one supported restoring Glass Steagall.   No one.  My response was that there were supporters, but that amongst Democrats, they favored doing nothing that would upset their sugar-daddies; namely big banks.  I’ve mentioned OpenSecrets.org too many times on this blog and in comments on others to bother adding yet another link to this story.  If you want to go there to see for yourself how your Democrats (and Republicans) fund their campaigns, use the link on the right sidebar of my blog.

I digress.  The point of this story is, three cheers for Senator Feingold!  He gets an ‘attaboy for having some balls.  In 1999, the Gramm-Leach-Bliley Act, which repealed important sections of the Glass Steagall act, passed by a nearly party line vote, with Republicans voting to repeal the second Glass Steagall Act and Democrats voting against.  Glass Steagall prevented investment banks and commercial banks from merging, in its simplest terms.  In essence, it was designed to force securities creators to be transparent, and it ended up protecting America by not allowing banks to become too big to fail.  Republicans didn’t like that one bit.

Democrats have had ten years to get used to the idea, and now they don’t like the idea of repealing the Glass Steagall repeal, either.  What changed in ten years?  The power in the House, that’s what.  The party in power is now the Democrats, and they’re the ones getting most of the dough from Wall Street and banks too big to fail.  If you argue with a Democratic voter today, he’ll tell you reinstating Glass Steagall isn’t possible in this economic climate; and he’ll blame Republicans.  He’s wrong.  Republicans and Bill Clinton are to blame for repealing Glass Steagall, but several Republicans have iterated that Glass Steagall should indeed become the law of the land once again, including John McCain, who voted “aye” to repeal Glass Steagall in 1999.  With a dominating majority in the House and one or two more Republican votes in the Senate, Restoring Glass Steagall would be a slam dunk.

DEMOCRATS DID NOT EVEN TRY.  That’s according to Russ Feingold:

“Each of those amendments would have improved the bill significantly, and each of them either failed or was blocked from even getting a vote.”

Democrats like to call themselves the Party that does the right thing.  In this case, the right thing is to restore Glass Steagall.  Anything short of that is the wrong thing.  Anything short of that makes you look like you are on the take for big banks.  If it looks like a duck, walks like a duck, and smells like a duck….     Ω

President Clinton, Speaker Gingrich, What the Fuck Were You Thinking?!!

Deregulation in 1979 due to rising interest rates and the incessant whining of Savings & Loans lobbyists greatly contributed to the S&L scandal that cost US taxpayers $125 Biilion in losses and rocked the financial world for almost a decade. The S&L scandal was a direct contributor to the 1990-1991 recession.

The Financial Services Modernization Act of 1999 (Graham-Leach-Bliley) did away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933.   Under the old law, banks, brokerages and insurance companies were effectively barred from entering each others’ industries, and investment banking and commercial banking were separated.  This one act of deregulation stands at the center of a host of other things our government did that caused the Great Depression of 2008-2009, and on and on and on.  Let’s ignore this new Great Depression for this post.

Let’s focus instead on two acts of stupidity the likes of which are unexplainable.  Both the Bank Bailout and the S&L bailout were directly related to bank deregulation.  Both times, it took eight to ten years for the shit to hit the fan, leading one to ask, “What else have we deregulated that’s going to brain-fuck us in a year or two?”  I’ll leave you to discuss that here or there or wherever your merry mind wants to take it.

I keep getting sidetracked, and for good reason.  This one article could breed hundreds of other articles; all of them written in head-shaking mode.  It’s astounding to me how irresponsible our government has been when it comes to maintaining order in our financial markets.   Republicans repeatedly say that deregulation is good for business, good for America.  “Get out of our way!  We know how to regulate ourselves better than Big Guvvment does anyway!”

Uh-huh.  And donkeys fly.  Democrats are not without blame.  The deregulation effort in 1979 that freed up the Thrift industry to Mafiatize and then implode  was a Democratic response to the whining of lobbyists.

Good God!  How I wish every Congressperson or President-wannabe would read this article!  How I wish that future elected officials would read it and learn to never, ever let any industry self-regulate.  How I wish they would all be forced to listen to an 120 hour reading of the TARP bill, so they could be reminded, right before they deregulated another industry just waiting to devour America, that sometimes, deregulation is very, very, very bad for America!  God, How I wish!

President Clinton, Speaker Gingrich, The Financial Services Modernization Act of 1999 was as mindlocked a bill as any dumbfuck ever wrote or signed in to law.  What were you thinking?!  Had you forgotten all about the S&L bailout, because it was soooo long ago?  Did you forget that when you deregulate banks or financial industries, they are like Kindergartners in a sandbox, who will even go as far as to eat the brown, lumpy, smelly sand if you don’t stop them?  What in God’s name were you thinking?

You guys were supposed to be our best and our brightest!  Instead you turned out to be two of our biggest idiots! With the total failure of deregulating the Thrift industry right in your faces, you couldn’t see that ignoring Glass-Steagall would lead, one day, to massive bank and insurance industry failures, and monstrous bailouts?  You couldn’t foresee that Wall Street and Banks-too-big-to-fail couldn’t control their own greed any better than a crack addict?  Are you fucking serious?  What were you smoking?

And Newt Gingrich continues to tell us that deregulation is good for America?  If any one of my readers votes for him, I’m sending you a gun and a bullet, with an attached note saying, “Do the right thing!”

All of this was avoidable.  Fannie and Freddie with their Mafia-style strong-arming, blackmailing banks into making more and more dangerous loans; CDO’s, junk bonds, AIG, Bear Stearns, Lehman Brothers, Goldman Sachs, ..all of it was avoidable had President Clinton and Newt Gingrich had the balls to stand up to billion-dollar lobbyists and say, “Take a fucking hike”.    Ω

Deficits, Unemployment, and Bear Markets; The Fruit of Tax Cuts and Deregulation

Republicans like to tell us that deregulation is good for business; that it causes more competition and lower prices for consumers.

But what does recent history tell us?

For the power industry, it tells us about Enron, and how they cheated, lied, stole, and strong-armed their way into a position where the world’s sixth largest economy was at their mercy for its electrical needs.  Enron created an artificial power shortage, and rolling blackouts swept California at a time when that state had far more than enough power generation capacity to meet its needs.   Enron used those blackouts to charge as much as twenty-times the actual going rate for electricity.   The story of Enron will probably never be forgotten; it’s one of the worst examples that deregulation proponents to have to deal with.

Let’s see, for the finance industry, where do I begin?  Where does it end?  Credit default swaps, an unregulated security basically brought down the entire financial sector in 2008.  Nearly every major bank in America required a bailout.  Also, nearly every major bank in America cooked its books to some extent to make their stock more attractive than their actual profits could back up.  It turned out that commercial and investment banks were built on a house of cards, and when the check was due, they couldn’t pay their tab. America had to bailout huge banks for fear that if we didn’t, the world’s economy would collapse. The rescinding of Glass-Steagall created a good-ol-boys network of banks too big for their britches, while executives at these firms took extremely shortsighted views of what it meant to build a profitable, stable company.

So..tell us again how deregulation is good for business?  Tell us again how deregulation creates jobs and competition; how it lowers costs to consumers?

The only history of deregulation I can think of turned out to be a nightmare for Americans both times, thanks to Enron and banks-too-big-to-fail.  One in five American males is unemployed.  Not just UNDER-employed.  UN-employed. That is as a result of the Wall Street meltdown.

Conservatives gripe about the progressive tax rate and the era of regulation that stemmed from the Great Depression.

Well, answer me this:  The period between 1945 and 1986 is generally known for economic stability, a growing, hard-working, ethical and moral middle class, and an achievable American Dream.  Since tax rates have been cut drastically and deregulation has taken hold, what three things  is America known for?

I’ll give you a hint.  The first answer starts with d-e-f-i-c-i-…and the second answer starts with u-n-e-m-p-l-o-y-m-e-n… and the third answer begins with b-e-a-r-m-a-r-k-e…

Think you can come up with the answers?  Conservatives want more of that.  I’m not sure what Liberals want.  I don’t think they know either.

I want a policy that uses the best of all ideas, rather than a policy that sticks to the failed, stale ideologies of the Nineteenth Century, like the two parties use.