Glass-Steagall fixed a problem that now, economists almost universally agree, did not exist. It separated "banking and investment" functions under the assumptions that banks were pumping depositor money into the stock market, which weakened the banks. One small problem: all the research we have now shows that the STRONGEST banks were the ones with "securities affiliates" and the weakest ones were the banks WITHOUT! Thanks Congress. Thanks FDR.
FDIC. Long thought by old timers to have "rescued the banking system" along with FDR's "bank holiday," deposit insurance, base on all the evidence we NOW have, was the WEAKEST type of banking "reform" available. In the 1920s, every state that had mandatory bank deposit insurance had horrible bank collapses. Where were banks strong? Where they had branch banking rules that allowed banks to branch, thus diversify risk. But the government did NOT legislate national branch banking, and hasn't done so to this day. That reform alone would have greatly strengthened the system. Instead, a mutant step-child of FDIC, FSLIC, played a key role in the 1970s-1980s S&L collapse by posing a "moral hazard." The S&Ls, due to REGULATION, were already in trouble, but managers and owners, assuring themselves that the depositors were "protected" by the FSLIC, took huge risks in an effort to right their sinking ships. Deposit insurance alone, certainly, was not to blame, but it was a BIGGER cause than people know.
How about "reforms" in the labor market, where the stupid "minimum wage" law virtually ENDED employment growth that had started to take place in 1934-1935? Studies now show that it alone perpetuated the Great Depression. More reforms like that?
The last thing we need to do is to treat this like a new "New Deal." That was the biggest economic disaster in our history, and the Great Depression was almost 100% the result of dumb government policies, from the Fed to Hoover to (most importantly) FDR.
Back then we were a MORAL people as a whole. Today ? Revolution and civil war would engulf this country like an FAE explosion.
By a 63 percent-33 percent margin, Americans say the president and Congress should focus on prosecuting corporate wrongdoers rather than passing new laws.
People are becoming acutely aware that their tax dollars are being used to create more and more new laws instead of protecting citizens.
As long as State and Federal governments continue to extort income-tax from the productive working class and creative business community the parasitical-politicians and self-serving bureaucrats will never run out of ways to spend that money to the net harm of the working class, the business community and society in general. If it's not the Democrats it's the Republicans -- usually both.
As Mr. Brown used to joking say to us neighborhood kids, "Which do you want, a fat lip or a busted eyebrow." That was not lost on me. From Democrats you get one, from Republicans you get the other. Voting for the lesser of evils still begets evil.
The Genie is Out of the Bottle
Congress has created so many laws that virtually every person is assured of breaking more than just traffic laws. Surely with all this supposed lawlessness people and society should have long ago run head long into destruction. But it has not.
Instead, people and society have progressively prospered. Doing so despite politicians creating on average, 3,000 new laws each year which self-serving alphabet-agency bureaucrats implement/utilize to justify their usurped power and unearned paychecks. They both proclaim from on high -- with complicit endorsement from the media and academia -- that all those laws are "must-have" laws to thwart people and society from running headlong into self-destruction.
Again, despite not having this year's 3,000 must-have laws people and society increased prosperity for years and decades prior. How can it be that suddenly the people and the society they form has managed to be so prosperous for so long but suddenly they will run such great risk of destroying their self-created prosperity? Three hindered new laws each year is overkill, but 3,000 is, well, it's insane.
The government is the all time champion of cooking the books and it has the gall to point fingers at the whole business community because of a few bad apples. The entire business community and employees that support it should stand tall against a government feigning to protect the little guy from organizations that cook their books.
If there was ever a prime example of the fox guarding the hen house it is the government claiming to protect the little guy from organizations that cook their books. President Bush will have to militarily smash down terrorism. For that is his job. It's not the President's, congress' or the government's job to manipulate the economy.
The business community with their employees will have to stand tall against the PC-status-quo fox -- self-proclaimed authorities claiming/feigning they'll use the government to protect the little guy and a complicit media and academia that supports them; for they are all the fox -- to regain their rightful place as the champions of honest business that has always increased the well-being of people.
The government, having already manipulated the economy to almost no-end, President Bush can play the unbeatable five-ace hand of replacing the threat-of-force IRS and graduated income tax with a don't-pay-the-tax-if-you-don't-want-to consumption tax. For example, implement the proposed national retail sales tax (NRST). Not only would that win votes for Bush and republicans in congress it would boom the economy.
Where will it lead?
War of Two Worlds
Value Creators versus Value Destroyers
Politics is not the solution. It's the problem!
The first thing civilization must have is business/science. It's what the family needs so that its members can live creative, productive, happy lives. Business/science can survive, even thrive without government/bureaucracy.
Government/bureaucracy cannot survive without business/science. In general, business/science and family is the host and government/bureaucracy is a parasite.
Aside from that, keep valid government services that protect individual rights and property. Military defense, FBI, CIA, police and courts. With the rest of government striped away those few valid services would be several fold more efficient and effective than they are today.
Underwriters Laboratory is a private sector business that has to compete in a capitalist market. Underwriters laboratory is a good example of success where government fails.
Any government agency that is a value to the people and society -- which there are but a few -- could better serve the people by being in the private sector where competition demands maximum performance.
Wake up! They are the parasites. We are the host. We don't need them. They need us.
* * *
After all, in calling for the resignation of Securities and Exchange Commissioner Harvey Pitt, McCain declares, “Government’s demands for corporate accountability are only credible if government executives are held accountable as well." Does that mean U.S. senators? Congress, Accounting, and the Free Market (McCain is grandstanding again)
"Too often, we have cooked the books, exploited off-balance sheet accounting, fudged budget numbers and failed to disclose fully the nation's assets and liabilities. If we in Washington are to have credibility in the public eye as we address the corporate accounting mess, we must reform our own fiscal practices," said McCain. Social Security Called A Bigger Fraud Than Corporate Scandals
Prove it first. It's not like it's a new discovery or problem. It's a seventy-year-old problem. It's just that now politicians and bureaucrats have trapped themselves and the general public is becoming increasingly aware. They've been caught and McCain is getting interview time to peddle gussied-up compassionate government.
"Allowing Americans to invest responsibly a small part of their payroll taxes will not only save Social Security, but will provide them with greater retirement income than those who no or will soon depend on Social Security checks," said McCain. Social Security Called A Bigger Fraud Than Corporate Scandals
Notice McCain so readily self-proclaims himself and government the authority to allow Americans to invest part of their own money. But he has a condition; it most be done responsibly. And who decides what is responsible? Certainly not the all-time champion, cook-the-books bureaucrats and snake-oil-salesmen politicians.
They -- self-proclaimed authorities -- are running citizens and society headlong into destruction.
Business leaders have led the way in setting a darwininan 'market economy' as panacea. But Elections come in a Democracy because we are a 'political' economy and not a pure market force dictatorship. This means that the results of our economic system are juried and approved by a majority of voters at election time.
I started school in NYC in the 30s and you guys have no idea of the euphoria that swept the neighborhoods with Roosevelt. As a kid I remember the sounds of 'Happy Days are Here Again' and the posting of the NRA Blue Eagle signs everywhere restored confidence in the economy.
In that election, the voters took the ball from business and handed it to government. Yes, then Government grew and stole the ball. FDR turned into a manipulator and dictatorially swept into office for an unprecedented four times.
So what is the message for the GOP? Grab the ball from business before the Democrats do. COME UP WITH A PLAN TO REDUCE UNCERTAINTY BEFORE THE DEMOCRATS DO. Uncertainty will be the death of the GOP. Jawboning won't cut it. The 'long run' ends on election day.
William Flax Return Of The Gods Web Site
About time someone thought of that.
Imagine what would happen if building inspectors were also in the office funiture business.
Put a CEO in jail, tighten SEC regulations, raise the penalty for securities fraud and, while we're at it, can't we do something about those exorbitant executive compensation packages?
If this downturn develops into something resembling the Great Depression, it will be due to capital fleeing the country in fear for its life.
And the blame must be placed squarely on the shoulders of those who know but choose to play the populist game in a misguided appeal for votes.
I'm referring to Republicans, since Democrats as a species plain don't understand business or economics or finance except as it relates to creative accounting methods such as used in making the Social Security Trust Fund "solvent" and cooking the books for companies they like.
And speaking of book-cooking, Paul Craig Roberts is about the only columnist who has not joined the lynch mob. He instead suggests that it's the change in SEC reporting rules -- as opposed to accounting principles, which once were the standard -- that's lead to the current troubles.
See his Rules no substitute for character to balance the current article with.