Greed Goes Global - and so goes Glass Steagall....

I have already accepted that the US has become a robber baron economy - but it had always been in the back of my head that expatriation was an option if things continued their downward spiral here.  But a recent round of reading and research has convinced me that the Robber Barons have  "gone global."

Take reinstating Glass-Steagall as an example....

First  - a little history on the Great Depression and Glass - Steagall.....

Glass Steagall was enacted in 1933 in the wake of the market crash of 1929 and the Great Depression through the FDIC.  Its purpose was to control speculation in the market place.

One of the provisions that prohibited bank holding companies from owning other financial companies created a Chinese wall between Wall Street-type investment banks and normal savings banks.  This prevented the potential conflicts of interest and speculation that was the order of the day prior to Glass Steagall.

During the era when everyone wanted to take a "weed whacker" to regulation - the roaring 90s - Glass Steagall was repealed.  This allowed depository banks to speculate with depositor's money which was a major player in the financial crisis of 2008.

Reasons sited in Congress for preserving Glass-Steagall in 1987 -

According to Wikipedia the arguments for preserving Glass Steagall in 1987 were as follows:

1.  There are conflicts of interest inherent in the process of granting credit (lending) and the use of credit (investing - or in some cases rolling the dice!)  by the same entity.   Hello - this is common sense!

2. Simple depository banks have more power than it would seem on the face of things.  They control other people's money (that's you and me in case you were wondering)  so that power must be limited to sustain competition and viability.  Hmmm, we now only have about 4 big banks - That's not competition - that's the definition of "too big to fail." Ya think they might have been onto something?

3. Securities can be risky (No! Really?) and can lead to major losses which could threaten deposits   This could create a situation where the FDIC must step in and cover depositors losses should a financial collapse occur.   (did the person who wrote this travel into the future - say to Sept 2008?)

4. Depository institutions (aka - banks) are supposed to limit risk…that's why we put our money there  - it is supposed to be safer than in a mattress.  Such institutions are not geared to manage risk wisely.

What came after the repeal of Glass Steagall.....

Commercial lenders started underwriting trade investments including mortgage-backed securities and collateralized debt obligations.  They also created the infamous SIV (structured investment vehicles) which bought these securities.  Elizabeth Warren - the chairwoman for TARP oversight said that this repeal and subsequent activity contributed to the financial crisis of 2008.

The answer is simple - Restore - Glass Steagall!

Not so fast.  The big banks like things nice and looosey goosey.  The do not WANT to restore Glass Steagall and if you think the republicans who are owned by the big banks want to disappoint their benefactors - guess again.

Then there is the G-20  & the WTO

This is where the rubber meets the road…Most anyone who reads something like the Robber Baron Economy for their recreation agrees that nationally the oligarchy is out of control and the casino on Wall Street is being protected by lobbyists on K Street.

But did we think about global greed?  I admit that I did not until Motivated in Ohio sponsored a discussion which opened my eyes to the damage that the international monied elite can do.

The US has signed an agreement called the financial Services Agreement that applies to over 100 countries and mandates major deregulation.  For example, it contains a rule that does not allow you to regulate the size of a financial firm.   So even if we choose to enforce rules about "too big to fail" the WTO says that we can't.   Since WTO agreements are binding and can result in sanctions if thwarted - the WTO has far more pull than the G20 agreements.   This policy ensures a continued commitment to deregulate no matter what is discussed domestically or at the G20.

So what seemed like a national problem becomes an international issue - which in turn prevents the issue from even being addressed domestically or internationally.... David Stockman referred to a "leveraged buyout of the United States."  He was part right - but what we are talking about is  a leveraged buyout of the world.

The videos below offer insight as well as sobering commentary - sorry - no humor today!

Which is just how the monied elite planned it...





© 2011 - Ruthmarie G. Hicks - http://www.therobberbaroneconomy.com - All rights reserved.