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To: RCW2001
Let's hope to HELL it doesn't bring "1930s-style reform." Let's look at some of those reforms:

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.

2 posted on 07/24/2002 7:52:53 AM PDT by LS
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To: LS
A fine post, LS.

The prospect of silly, constricting new laws from Congress are spooking markets. It is largely not some media contrived notion that everyone is scared of the next corporate crook behind the door. The markets may at least stabilize in August when Congress goes on vacation.
6 posted on 07/24/2002 8:33:45 AM PDT by Lee_Atwater
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To: LS
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,

We're still enjoying the benefits of the contruction of the Great Hydroelectric Dams that were built during this period. And the CCC built some really nice state parks in Pennsylvania.

Time to increase tariffs and build some infrastructure.
Put America back to work again CREATING wealth, not merely consumeing and squandering wealth in the "service" sector.

9 posted on 07/24/2002 8:58:58 AM PDT by Willie Green
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