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A re-instatement of Glass-Steagall
- Scott_MacGregor 17y agoThis seems kind of like closing the barn door after the horse has already gotten out (and lions have eaten the horse). Just an empty barn full of taxpayers’ money that is not being lent out. A case of the fox watching the henhouse and we taxpayers seem to be the chickens. http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act
- ube 17y agoThe barn door was closed with this act until 1999 when it was repealed. How is that "closing the barn door after the horse has already gotten out"?
- Scott_MacGregor 17y agoReinstating it now is like closing the door. The damage has already been done, the system has been raped and pillaged already. Closing the door will not fix the damage. Closing the door is a Paraphrase. Definition: http://en.wikipedia.org/wiki/Paraphrase http://en.wikipedia.org/wiki/Paraphrase
- tome 17y agoI think you'll find that there are a whole load of baby horses still in the barn, and you're going to want to close the door to stop them getting out in the future.
- Scott_MacGregor 17y agoI agree with you Tome, I am not saying it is bad, just that it was allowed to happen and that is where the problem is. Now we taxpayers have to pay those who did this with our earnings after they knowingly shot the system down in flames.
- gaius 17y agoRemind me who was the POTUS then?
- mattmaroon 17y agoThat had more totally non-applicable down-home folksy sayings per paragraph than the average Sarah Palin speech. Kudos.
- ube 17y agoI heard about Glass-Steagall last month on NPR via Robert Reich (http://marketplace.publicradio.org//display/web/2009/11/04/pm-reich/?refid=0&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+APM_Marketplace+%28APM%3A+Marketplace%29 http://marketplace.publicradio.org//display/web/2009/11/04/p...) It sounds like a better approach then many regulations that lead to very little.
- TheElder 17y agoThis Robert Reich? http://www.youtube.com/watch?v=opxuUj6vFa4 http://www.youtube.com/watch?v=opxuUj6vFa4 http://www.youtube.com/watch?v=nT1TkLgfinE http://www.youtube.com/watch?v=nT1TkLgfinE
- kissickas 17y agoUnfortunately, even if I do agree with you that Robert Reich is a racist, that is an ad hominem argument and I don't see how his racism would have a strong influence on his view of the Glass-Steagall Act.
- credo 17y agoThe unemployment rate among non-Asian minorities is much higher than that of the rest of the country (e.g. Nov African-American unemployment rate is 15.7%) Are you suggesting that Reich is a racist because he sees this as a problem and wants to ensure that African Americans and Hispanics get employment opportunities ?
- spamizbad 17y agoIf you think it's racist then you must have skipped the history lesson on The New Deal whereby, in an effort to secure the votes necessary, they (House/Senate) basically had to promise key members that the recovery would touch the "right" people. The right people in this case being white males. Blacks, Asians, and Women of all races were largely cut out of the New Deal unless hiring them was a necessity due to lack of able-bodied white men. Whenever economists speak of jobs programs for everyone, not just "white male construction workers", this is what they're eluding to.
- yummyfajitas 17y agoFrom the article: ...will prevent the economic meltdown we are in the middle of from ever happening again..by making it impossible for those banks with access to the sovereign's fractional reserve privilege to speculate with it. The author doesn't seem to realize that Glass-Steagall won't prevent commercial banks from making bad home loans. From the article: Lending went to finance productive assets (e.g. factories, machines, tractors, combines, etc) instead of financial speculation as it had in the 1920s. Instead of speculating in "finance", lending went to speculate in "productive assets" like equities and bonds. Seriously, what is this tripe doing on HN?
- karzeem 17y agoI think the difference between equity speculation and bond speculation is important. Debt bubbles are much more catastrophic than equity bubbles.
- mattmaroon 17y agoRight, the problem wasn't as much the home loans as all of the side-wagering. Nobody really knows the exact extent, but the credit default swaps are believed to be one to two orders of magnitude more money than the CDOs they were based on. Lehman and AIG in particular were destroyed by them.
- yummyfajitas 17y agoLehman was not destroyed by swaps. They just took a large position in subprime loans and held many of the riskier tranches. This is exactly what the article advocates forcing commercial banks to do. Of course, the article doesn't make any distinctions that either matt or karzeem make, such as debt vs equity or CDO vs CDS.
- mattmaroon 17y agoActually you're right, they had $150b in CDOs against which over $400b in CDS were written. Still illustrates the point handily.
- mnemonicsloth 17y agoAccording to this guy, there are no downsides to a policy that will have the side effect of breaking up all of America's largest financial institutions. In his closing he says that passing this measure will "usher in a productive explosion in America that we have not seen in the last 50 years." The last 50 years have already seen the largest sustained economic expansion in all of human history. Is that not good enough somehow? I want my ten minutes back.
- hristov 17y agoI know it is such a great thing that we have all these large financial institutions. You know because they are so large they become too large to fail, and then we get to subsidise them with out tax dollars. Who would want to end that?
- andylei 17y agoi seems like your beef with these companies is that we're subsidizing them. so is the problem the institutions that are asking for money? or our politicians that are giving them money?
- barrkel 17y agoWell, the institutions can hold the world economy to ransom, so not giving them money would be cutting off our nose to spite ourselves. Better not to have such powerful and important banks.
- mnemonicsloth 17y agoIf there's one thing the financial crisis has taught everyone, it's that we need less humility in the face of world-spanning systems no one person can possibly understand. Sarcasm is definitely the way to go if you want to foster a productive debate.
- dantheman 17y agoToo large to fail has always been bullshit; it really has no bearing on this. They got a handout, let's not pretend it was justified.
- jwb119 17y agothis entire article is just conclusory. why will these things happen? he doesn't give any evidence..