Do we need to reinstate the Glass-Steagall Act?

Grdeken · 2012-05-23T16:50:52.999801+00:00

Seriously, lets take this a bit further. Do we or do we not believe in the power of markets to find the right answers?

In theory if we let all the banks do what they want, eat their own young, eat each other, and so on, with no promises to backstop them via FDIC or other similar, eventually the theory says, they will come to a correct arrangement that balances growth and risk.

It seems to me the foundation for a justification of Glass/Steagall is FDIC. If FDIC is not there, or to say it more broadly if the government has no direct interest in the bank's financial results, then there is no justification for higher-order government regulation of the banks. Or am I wrong about that?

Grdeken · 2012-05-23T16:47:31.596771+00:00

Why is there a need for commercial banks to compete internationally with local depositors money?

Commercial banks want depositor's money, they don't care where it comes from. They need to compete for deposits, regardless whether the deposits are potentially "local" or not.

Have you heard of Icesave?

Grdeken · 2012-05-23T16:38:20.250203+00:00

Why is no one suggesting that we abandon the FDIC backstop?

This is what distorts the banking industry in the first place. That and FNMA and the rest of the federal proclivity to aciton.

Grdeken · 2012-05-23T16:36:22.432128+00:00

I'd say banks are better judges of what's a good investment and what's not than the government, and certainly than the public at large.

Which was completely not the case during the crisis.

What was completely not the case? Do you think the public was waving the yellow flag warning banks of their risky investments? Do you think the SEC was doing that?

No one is denying the downfall. The question is whether Barney Frank or the army of porn-watching SEC regulators could have done anything to forestall or prevent it. Just because the commercial sector failed, doesn't mean the govt could have done anything better.

To support my point, look at what the government did after the fall. Arguably the cure was worse than the disease.

Diego780 · 2012-05-23T16:31:54.122667+00:00

Interesting headline.

I'm removing the post, though, because the source is known to be bad. Find an independent source for the story and re-post please.

ashuman · 2012-05-23T16:21:48.804186+00:00

you spelled it wrong. DID.

It's the new baseline. Obama's budgets are growing 1.4% on a baseline that is 17% higher than it was previously. Therefore, the stimulus is continuing. The budget has not returned to pre-stimulus numbers.

ashuman · 2012-05-23T16:19:17.872832+00:00

virtually every piece of legislation I've seen with the exception of @ 3-4 proposed bills cut the rate of growth not spending.

yep, and they complain and moan about it too. They talk as if the proposal to cut growth is actually real cuts in spending. Unreal.

Right now it looks like Obama has completely abandoned congress rather than trying to do anything and that's sad. He's not moving anything or even trying to.

Understandable for mere mortals, but that's not who we expect our president to be. We hope our president can rise above all that crap and talk to us about the congress as if we are adults. Obama should be using the bully pulpit to demand that we reform the congress, reform spending. But he's just business as usual, like any other politician.

hope/change not.

ashuman · 2012-05-23T16:12:58.952208+00:00

Presumably because a different degree of money spent domestically, let's say on Army Corps of Engineers projects like locks and levees, or on municipal projects like new sewers or upgraded schools, would have a positive long-term influence on the domestic economy generally.

On the other hand, money spent on war goes to other countries. In the actual fact, first we spent our money destroying their schools, bridges, and power plants, then we spent our money money rebuilding them. The only thing the US gets out of that, is improved economic results for vehicles and weapons manufacturing firms. We don't get any long-lasting infrastructure benefit. The military is also a huge consumer of fuel, and that military action therefore drove up fuel prices, which again sends money out of our country and into someone else's, which again acts like a large drag on our economy.

Economically, military action is worse than doing nothing. We could have had a huge bonfire and burnt the millions per day we spent in Iraq, and still come out ahead, economically.

ashuman · 2012-05-23T16:07:28.019309+00:00

You all are talking about the mechanics of who proposes and signs, and this is not an issue for argument. The procedure rules are the rules, and basically you've summarized them accurately.

But it's not about the procedure. There is a negotiation between the president and congress over the budget. It happens outside of the process.

Your assertion that the president is not responsible for a budget is like saying a woman is not responsible for her marriage choice, because the man makes the proposal. That's obviously wrong. And it's wrong in the case of the US federal budget too.

TheGhostOfNoLibs · 2012-05-23T15:59:04.471472+00:00

Keynesian policy is based on an irrational view of human nature. In a large economy, led by an inept legislature, the right thing never happens in the fat years.

mepper · 2012-05-23T15:54:40.921299+00:00

what's your point?

That people have a right to complain? That's like saying, people have a right to complain after they've been mugged, or carjacked. Yeah, they do. But primarily, they have a right to a peaceful existence, free from illegal assault.

The problem is not that we don't let them complain after being assaulted. The problem is the prevalence of assault in prison, in the first place. Prison is a violent place, that's the problem. Blaming the prisoners for that is a giant cop out.

mepper · 2012-05-23T07:33:51.965761+00:00

In the US, if you go to jail, you essentially surrender your human rights.

It's one thing to sentence a person to incarceration. It's another to repeatedly assault that person under the guise of "criminal justice." Do we wonder why people emerge from prison only to commit more crime?

AyeMatey · 2012-05-23T06:58:59.889192+00:00

ok I fixed this bug. thanks for reporting it. get the fix at http://cleanmodqueue.codeplex.com/releases/view/88257

As for the other feature request, that will take some more time.

AyeMatey · 2012-05-23T06:23:51.746120+00:00

hmmm ok, I will have a look.

AyeMatey

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