Wall Street’s New Game

Interesting that Mr. Hirsch would draw a comparison of Military and Intelligence spending to the financial crisis and regulation of the Wall Street banking system.
One would thing the defense budget that nearly equals the defense budgets of the world might have changed after the end of the cold war. Yet it did not and is so dysfunctional that in spite of the huge expenditure is unable now to defeat a group of ragtag religious fanatics who do not have even a navy or air force. Yet America is fearful they will somehow manage to overpower this country.
The Financial System may not see the change coming but the fact is the economy of the US has undergone a profound change that has been 40 years in the making.
With millions in or foreclosed on that in and of itself eliminates millions of potential home buyers, unemployment is another contributor with millions now marginal consumers at best. Not to mention that loss of consumers contribute to even more job loss.
At some point the Government will have to stop propping up the bankers and they will once again have to rely on the economic wherewith all of the middle class and they will find a greatly diminished consumer base that is unlikely to change perhaps ever.
The problem is the Wall street banking system became a win lose system, the losers are the middle class who now are unlikely indeed unable to support the economy of the US as we once knew it; including the Government by way of taxes which are also going to be diminished..
But that was the goal of Globalization all along to bring America to the same level as China and it has succeeded.

When FDR instituted the Glass-Steagall ACt, bank failures virtually disappeared. When Ronald Reagan started eliminating the regulations that kept our banking system stable, we had the big saving and loan crash in the late 80's. The current ecnomic crisis is the direct product of Phil Graham's economic policies. (Graham was McCain's economic advisor.) We need to reinstitute the Glass-Steagall Act. All the fancy Wall Street "products" like deriviatives and APR mortgages need to be outlawed. The people need to take back the Senate and eliminate all the Byzantine procedures (like the filibuster) that reward lobbyists and thwart the needs of the people. Rather than saying we can't, we need to say we can.

Also, we need to force the billionaires to pay for their own bailout. We need to shut down all tax havens and slap a heavy surtax on the super-rich. The rich didn't earn their money. They stole it. We need to get our money back.

Ths article raises some interesting points about the evolution of a political system. So long as the world around it is stable and unchanging any given political system works fairly well. But when things change and the system fails it finds itself weighed down by its beauracracies resulting in calamity and hardship for the people it governs. Eventually that claamity becomes so intolarable that a dictatorial regime unfolds which has accumulated enough power to rewrite the government and undo the failed beauracracies. Many heads may roll in the process. The French revolution and the rise of Nazi Germany are classic examples in modern history of this process. I believe such a time is arriving in the U.S. where dramatic reform is needed or a bloated and failing beauracracy will generate enough calamity that a revolution could happen. This may take the form of a third party or something worse. Hopefully our leaders will wake up and make the sweeping changes necessary to transition the country from the cold war fossil fuel era to a modern and green modern reality. The alternative is increasing upheaval and unrest of the populace due to the ongoing systemic failures of the current system.

Orson Welles had it all wrong in his "War of the Worlds" saga. Earth will not be destroyed by the Martians, but by an Over the Counter Credit Default Swap.

Lenin once arguably said, "The Capitalists will make, and sell the rope from where they will hang". Turns out that the "rope" can very well be our increasingly corrupt Financial system.

I hope for all our sakes that the Obama administration understands what's at stake in truly fixing the un-regulated greed that is destroying Wallstreet.

I used to find Milton Friedman a source of great conflict, I found
implementation of his theories an impossible reality due to an
increase in problems.

But now I believe that the point of Milton Friedman is this
statement, "We are a free market economy, their is no other way to
pose discussion about organization."

I had a vision of fixing in oil and cars in 98, to a neurtal process, break even business. I'm a
possible character in your free market making the observation that because a business
doesn't replace the resources it requires to create a product, the product will be effected
negatively. The goal of the economy needs to change, ignore capitalism and communism,
"safe engineering" is the necessary way of discussing organization.

I paced though the Louvre alone, it took me 2 hours, great story.

When I was in Europe September 11th, 2001 happened and this is why
I began reading The Economist in depth. That event to me said people
need to give America attention and understanding.

When I was reading The Economist I believe I found a loop in the
content. I think the magazine communicated to me that the world can
not enter the knowledge economy while America experiences it's
Pop Culture worker classing cycle. America's Pop culture worker
classing reality needs to be understood and adjusted into safe
worker directions.

I believe I am the interest rate like I was expecting, even if that
doesn't bring us the ability to start the knowledge economy,
directions about classing are available. Their are a number of
interesting and harmful worker oppressions that are capable of
being legel and finding a safe place in the knowledge economy.
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No doubt Wall Street will adapt to any and all new regulations with myriad ways to avoid them. In the end the new business practices on Wall Street will be the same as the old ones. Another financial meltdown will occur down the road and we will start all over again after it happens. The simple truth is that no regulation can stop determined and sustained efforts to skirt the law and profit from the effort. Wall Street runs on the pursuit of profit and that end always justifies the means used to do it.

The dilemna is this. Temasek is the signifier. Money is mobile and its giving a giant thumbs down.
Aly-Khan Satchu
www.rich.co.ke

More of the blame OTS rhetoric here. A little research would show that Countrywide was regulated by the Comptroller of the Currency and the Federal Reserve until mid-2007...just before the markets blew up. You really think they made all those loans in the last couple of months? And far more institutions have switched away from the thrift charter than to it - so be careful with these broad generalizations. If this were an OTS-only problem, we wouldn't have had BofA, Citi, and all those other Fed/OCC regulated banks lining up at Treasury time and again for Federal $$. This is a far more complex story than 'regulators failed' and the solution is not nearly as simple as rearranging the regulators.

its called "financial architecture" and its different than what summers or geitner are experts at. there are very few financial architectsin the entire world. economists come close. the key ones have been shut out of the discussion. stigliz, krugman, etcetera

does obama have the vision and guts to identify the problem? so far, it looks like he does not.

more details below in a paper written 7 years ago
"Fractional Reserve Banking as Economic Parastism"
http://econpapers.repec.org/paper/wpawuwpma/0203005.htm