In a letter Spitzer wrote just before he was outted, he said that the Feds has "preempt(ed) all state predatory lending laws, thereby rendering them inoperative" and "prevented states from enforcing any of their own consumer protection laws against national banks." In response to Spitzer's effort to fight the deregulation, he was sued by the federal government.
The predatorial lending was a faxsimile of the broader derivatives crisis. In both cases, the Federal government changed long-standing regulations. Here is Patrick Wood, editor of The August Review, writing in his article "Globalist Ultimatum: Pay up or collapse":
"On March 31, 2008, Paulson quietly released a 200 page document titled, "Blueprint for a Modernized Regulatory Structure" that he and Bernanke are now actively pushing Congress to adopt. It basically calls for the complete restructuring of U.S. markets and their regulatory structures to meet new “global standards”. After all, [their position is that] our regulatory bodies have been created over the last 75 years and are not compatible with today’s financial challenges. In addition, the Blueprint calls for much more self-regulation by the banking/securities industry itself. The very people who brought us this financial chaos in the first place, want us to let them do whatever is in their self-perceived best interest to protect and increase their profits. Meanwhile, Paulson recently demanded and received from Congress a blank check for the bailout of Fannie and Freddie. The alternative, he boldly claimed, was the further meltdown of the U.S. housing market and likely destruction of the economy."
The "Blueprint" makes an effort to accomodate regulatory challenges that have risen with the increasing complexity of financial services products. The document advocates making changes in the regulatory framework in recognition of the internationalization of the financial markets. In essence, this means that foreigners will do as they wish with their money, and if the US doesn't do enough to placate them, their money will stay offshore.
Paulson's plans reflect a changing world, but they don't exactly elevate the rights of the American purchaser of financial products to the top of the pyramid. It's hard to see how the Paulson/Bernanke model for financial modernization will protect the interests of individual investors. Instead the document hints at the goals of the New International Economic Order that groups like Bilderberg and the Trilateral Commission have been trying to implement.
Creating uniformity in international standards appears to be about paving the way for transnational entities to buy and sell financial products at the lowest possible risk. If anything, this crisis and the Blueprint show just how dangerous implementing a new financial order is, and highlights the transference of risk from the institutions to the government, who is to be held responsible for whatever losses and problems occur as a result of the changes, all in the name of stabilizing the markets, a euphemism for bailing out its biggest players, it would appear.
End of an error
The gilded age of American supercapitalism appears to have reached its end. De-regulation has its limits, and if government wants to intervene, it needs to learn from past mistakes and economic disasters like the Great Depression, and enforce the laws created in its wake rather than plow vast sums into the parched soils of the financial sector.
In trying to accomodate business, the US government under Bush has simply expended nearly infinite amounts of taxpayer money with little resulting benefit to the American public, markets, or the consumer. Corporate largesse benefits corporations and a small group of businessmen, but little of the electorate--or both of the current Presidential candidates wouldn't now be calling for more regulation. As the financial markets begins to quiver under the strain of trying to make too much, too fast, for too long, resistance to the lax regulatory environment has strengthened as the consequences of de-regulation make themselves known.
The ambitions of a handful of very powerful corporations have been contained, limited by the limitless greed of its principal players. The idea of a super-state that transcends national boundaries is on hold, if not utterly refuted by the economic distress that globalization--coupled with de-regulation--appears to have brought. The idea of creating a single North American Union may have to wait. Still, the greed that inspires multinational corporations won't go away.
It's only through the ongoing efforts of a participatory and informed citizenry--acting like sentinels--that perversions of the law and regulatory framework can be avoided. It could take a whole 'nother Depression to brand into Americans' brains the reality of the struggle workers face--Marxian--in their economic self-interest opposing the owners of the means of production.
After each bout of class warfare comes a period of economic introspection which sees the passage of laws and protections which in time are labelled economic impediments by the "pro-business" Right.
Maybe our lesson--a repeat--will be better learnt this time. Or maybe the credit crisis will just keep unfolding until the economy corrects, causing a good deal of "creative destruction" that will undermine our standard of living. Sadly, every economic calamity seems to povertize the middle and working classes, and the rich invariably end up wealthier. This most recent crisis will be no different.
I'll admit a sense of schadenfreude as the investment banking industry crashes. Reading through the alumni magazines of the illustrious institutions I attended, I've been jealous to see how many work in the investment banking business. These highly successful individuals have explained on several occasions just what it is they do, coupled with a thinly veiled effort to rationalize the vanity of their obscene profits. Maybe my inability to understand how my classmates made their money in that industry served well as an advance warning device--Peter Lynch's axiom that people should buy what they know still holds. If I could have figured out what all these exotic derivatives really were then I would have been far more confident in their ultimate viability.
With investment bankers collapsing now, it's clear that greed, coupled with inadequate regulation, meant that (MY) short-term profits were more important than the long-term viability of the industry. Without regulations, as it turns out whatever profits--obscene though they were--brokerages made in the run-up will be erased by the collapse not only in the stock of banks and investment banks, but the entire financial industry as we know it. Whatever gains circumventing Glass-Steagall may have provided--which went to a well placed and politically influential few--will be dwarfed by the contagion effect.
The point of government regulation is not to pointlessly reduce the growth of the economy, although this is how the issue has been framed on the political front, in terms that clearly favor the Right's quid pro quo with the business leaders who've pledged their support in return. The myth that regulation can only inhibit growth is being proven wrong as the consequences of inadequate regulation by the government of American style capitalism (hyper-capitalism/capitalism on steroids) are doing far more damage than any regulatory impediments could have.
If the accumulation of money--capital--is the ideal, our society isn't better off through de-regulation. Short-cuts were taken so some people could make a lot of money for themselves, whatever the cost to society, no matter how unsustainable. Net-net, the amount of taxpayer funds spent on bailouts in the wake of the speculative craze far exceeds whatever profits the investor class and their corporate actors made in their speculations, once the scope of losses are known.
The predatorial lending was a faxsimile of the broader derivatives crisis. In both cases, the Federal government changed long-standing regulations. Here is Patrick Wood, editor of The August Review, writing in his article "Globalist Ultimatum: Pay up or collapse":
"On March 31, 2008, Paulson quietly released a 200 page document titled, "Blueprint for a Modernized Regulatory Structure" that he and Bernanke are now actively pushing Congress to adopt. It basically calls for the complete restructuring of U.S. markets and their regulatory structures to meet new “global standards”. After all, [their position is that] our regulatory bodies have been created over the last 75 years and are not compatible with today’s financial challenges. In addition, the Blueprint calls for much more self-regulation by the banking/securities industry itself. The very people who brought us this financial chaos in the first place, want us to let them do whatever is in their self-perceived best interest to protect and increase their profits. Meanwhile, Paulson recently demanded and received from Congress a blank check for the bailout of Fannie and Freddie. The alternative, he boldly claimed, was the further meltdown of the U.S. housing market and likely destruction of the economy."
The "Blueprint" makes an effort to accomodate regulatory challenges that have risen with the increasing complexity of financial services products. The document advocates making changes in the regulatory framework in recognition of the internationalization of the financial markets. In essence, this means that foreigners will do as they wish with their money, and if the US doesn't do enough to placate them, their money will stay offshore.
Paulson's plans reflect a changing world, but they don't exactly elevate the rights of the American purchaser of financial products to the top of the pyramid. It's hard to see how the Paulson/Bernanke model for financial modernization will protect the interests of individual investors. Instead the document hints at the goals of the New International Economic Order that groups like Bilderberg and the Trilateral Commission have been trying to implement.
End of an error
The gilded age of American supercapitalism appears to have reached its end. De-regulation has its limits, and if government wants to intervene, it needs to learn from past mistakes and economic disasters like the Great Depression, and enforce the laws created in its wake rather than plow vast sums into the parched soils of the financial sector.
In trying to accomodate business, the US government under Bush has simply expended nearly infinite amounts of taxpayer money with little resulting benefit to the American public, markets, or the consumer. Corporate largesse benefits corporations and a small group of businessmen, but little of the electorate--or both of the current Presidential candidates wouldn't now be calling for more regulation. As the financial markets begins to quiver under the strain of trying to make too much, too fast, for too long, resistance to the lax regulatory environment has strengthened as the consequences of de-regulation make themselves known.
The ambitions of a handful of very powerful corporations have been contained, limited by the limitless greed of its principal players. The idea of a super-state that transcends national boundaries is on hold, if not utterly refuted by the economic distress that globalization--coupled with de-regulation--appears to have brought. The idea of creating a single North American Union may have to wait. Still, the greed that inspires multinational corporations won't go away.
It's only through the ongoing efforts of a participatory and informed citizenry--acting like sentinels--that perversions of the law and regulatory framework can be avoided. It could take a whole 'nother Depression to brand into Americans' brains the reality of the struggle workers face--Marxian--in their economic self-interest opposing the owners of the means of production.
After each bout of class warfare comes a period of economic introspection which sees the passage of laws and protections which in time are labelled economic impediments by the "pro-business" Right.
Maybe our lesson--a repeat--will be better learnt this time. Or maybe the credit crisis will just keep unfolding until the economy corrects, causing a good deal of "creative destruction" that will undermine our standard of living. Sadly, every economic calamity seems to povertize the middle and working classes, and the rich invariably end up wealthier. This most recent crisis will be no different.
I'll admit a sense of schadenfreude as the investment banking industry crashes. Reading through the alumni magazines of the illustrious institutions I attended, I've been jealous to see how many work in the investment banking business. These highly successful individuals have explained on several occasions just what it is they do, coupled with a thinly veiled effort to rationalize the vanity of their obscene profits. Maybe my inability to understand how my classmates made their money in that industry served well as an advance warning device--Peter Lynch's axiom that people should buy what they know still holds. If I could have figured out what all these exotic derivatives really were then I would have been far more confident in their ultimate viability.
With investment bankers collapsing now, it's clear that greed, coupled with inadequate regulation, meant that (MY) short-term profits were more important than the long-term viability of the industry. Without regulations, as it turns out whatever profits--obscene though they were--brokerages made in the run-up will be erased by the collapse not only in the stock of banks and investment banks, but the entire financial industry as we know it. Whatever gains circumventing Glass-Steagall may have provided--which went to a well placed and politically influential few--will be dwarfed by the contagion effect.
The point of government regulation is not to pointlessly reduce the growth of the economy, although this is how the issue has been framed on the political front, in terms that clearly favor the Right's quid pro quo with the business leaders who've pledged their support in return. The myth that regulation can only inhibit growth is being proven wrong as the consequences of inadequate regulation by the government of American style capitalism (hyper-capitalism/capitalism on steroids) are doing far more damage than any regulatory impediments could have.
If the accumulation of money--capital--is the ideal, our society isn't better off through de-regulation. Short-cuts were taken so some people could make a lot of money for themselves, whatever the cost to society, no matter how unsustainable. Net-net, the amount of taxpayer funds spent on bailouts in the wake of the speculative craze far exceeds whatever profits the investor class and their corporate actors made in their speculations, once the scope of losses are known.
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