It's the Deregulation, Stupid
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You could argue that transportation deregulation has been a wash—replacing a system of bureaucratic incompetence with one of profit-seeking negligence, and exchanging safety for lower prices. The same cannot be said for the deregulation of the energy sector, notably the natural gas and oil industries under Ronald Reagan, and the electric utilities under George H.W. Bush and Bill Clinton. Left to its own devices, a deregulated energy industry has given us Enron and Exxon—California brownouts and $100 barrels of oil. Deregulation of the telecommunications industry, also under Clinton, reduced the number of major phone service providers to just a handful of multimerged giants.
Even more damaging, in light of today's economic crisis, was the sweeping deregulation of the banking and financial services industries that took place in the 1990s. What makes this enterprise particularly confounding is not only the fact that it took place under a Democratic president with support from a majority of Democrats in Congress, but that it followed so closely on the heels of the savings and loan crisis, which ought to have served as a cautionary tale on the dangers of deregulation in the banking sector. The Depository Institutions Act of 1982, another Reagan initiative, was supposed to "revitalize" the housing industry by freeing up the S&Ls to make more loans. Instead, the regulation rollback led to what economist John Kenneth Galbraith called "the largest and costliest venture in public misfeasance, malfeasance and larceny of all time" as they engaged in a fury of high-risk lending. The collapse that followed cost taxpayers an estimated $150 billion in government bailouts, and contributed to the recession of the early 1990s.
Yet Bill Clinton, elected in large part because of that recession (a la James Carville's "It's the economy, stupid"), was talking about deregulation before he was even inaugurated. The National Review reported that "Bill Clinton embraced at least one Reaganesque idea at the Little Rock economic summit" he held in December 1992: "banking deregulation."
The banking industry objected to regulations put in place in 1989 after the S&L debacle, as well as others dating back to FDR. The heads of the six major U.S. banking associations, according to the National Review, had written "a long letter to the President-elect in December advocating nine substantive reforms." The conservative magazine concluded that the new president seemed more than willing to oblige, but bank deregulation was being held back by such powerful congressmen as "House Banking Chairman Henry Gonzalez (D., Tex.), a populist throwback to the Thirties who believes bankers are by definition out to exploit the 'little guy'" and "House Energy and Commerce Chairman John Dingell (D., Mich.), who holds a quasi-religious belief that banks caused the Great Depression and must be tightly regulated. (Dingell's father was a principal author of the Glass-Steagall Act of 1933.)"
The Glass-Steagall Act was, in fact, a primary target of the Clinton-era deregulation effort. An early piece of New Deal-era legislation, the act was passed in response to speculation and manipulation of the markets by huge banking firms, which most liberal economists believed had brought on the crash of 1929. Glass-Steagall imposed firewalls between commercial banking and investment banking, and between the banking, brokerage, and insurance industries. According to the Center for Responsive Politics, which tracks lobbying and campaign contributions, "Eager to create financial supermarkets that peddle everything from checking accounts to auto insurance, the three industries for years have lobbied Congress to streamline regulatory hurdles that bar such operations."
Obama and Hillary come from Wall Street, namely,
JP Morgan, Goldman Sach's, LehmanBrother's, etc.
See the following URL in order to help you understand the money web.
The bottom line is, you don't raise $193
millon from "Joe and Jill".
http://www.opensecrets.org/pres08/moneyweb.asp
No more BS about how the market can regulate itself.
www.thenation.com/doc/20080211/fraser
Obama 'negotiated' a deal that allows the Neclear Power Plant, to self identify when they violate the law, and volunterily notify local residents!
(on TV, 20/20 or 60 Min.)
If the government wants to regulate something, they will get strict again on monopolies. Those are far more dangerous to the economy. (I'm thinking of the big media conglomerates in particular) If one of those falls, they no longer just take themselves, but 50 subcompanies with them. That is dangerous.
If they impose strict regulation again you can basically start writing about the Great Depression of 2008 right now.
2.)Andie927 your article is ancient in terms of the current race (I liked Edwards, but articles with him in them are losing relevance in a rapidly changing campaign). The MoJo article posted is about tentative steps toward regulation by Obama which is heresy in the current climate of Freedman style Reganomics. That is why taking bold steps would have a highly charged reaction from business types (fight them after the campaign not during).
3.)manny, don't you get it or have you been worshiping at the alter of Freedman and Regan too long? Deregulation is what is killing the middle class in this country, it's what caused the 1929 stack market crash (OK lack of regulation but its the same lassie faire thing), and it is what has caused the current financial crisis. Regulation on the hand helped restore confidence in the economy and end the depression, and it set the stage for the largest increases in the middle class and general prosperity in the nations history (oh how terrible all that prosperity was under regulation between the '40s and the '90s). A little regulation is a good thing, now it shouldn't take you six months to fill out bureaucratic forms to start a business, but smart simple and enforceable regulation makes a lot of sense.
I generally agree with the rest of your comments, berts ideas on fuel and clothing make some sense but the wall street farmers market thing may just go a little too far.
"The Community Reinvestment Act is a United States federal law that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as "redlining." The purpose of the CRA is to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses. The CRA was passed into law by the U.S. Congress in 1977 as a result of national grassroots pressure for affordable housing, and despite considerable opposition from the mainstream banking community."
The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions.
This is what rocketed the crisis wildly:
In 1995, as a result of interest from President Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for five years. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997.
As Stan Liebowitz, a University of Texas economist, has pointed out, a Fannie Mae Foundation report enthusiastically singled out one mortgage lender that followed "the most flexible underwriting criteria permitted." That lender's loans to low-income people had grown to $600 billion by 2003. Its name? Countrywide, the largest U.S. mortgage lender and one of the lenders in the most trouble for its lax lending practices.
The rest is history.
Banks were forced to loan money to borrowers they never would have, had government regulation not forced them to. Then, additional government regulation allowed Wall Street to package the loans that never should have been made into negotiable securities and sold, and resold. This made these high risk securities backed by the loans that never should have been made in the first place popular with the hedge funds and investment banks worldwide - because they had a high yield. This created tremendous demand back down the pipe for more of these securities, which accelerated even further the building of homes that never should have been built, and sold to buyers who could not afford, nor had the ability to borrow, which overbuilt the entire housing market and deflated the value of all houses. The genesis of the entire mess is GOVERNMENT wrongly demanding a solution to so-called “affordable housing”, adopting the attitude that Banks were racist for "wink & nod" redlining, then ordering banks to loan money to people NOT based upon credit standards that protected the bank. It was in the mid-1990s when our vaunted statesmen decided the CRA - the Community Reinvestment Act (nice name, kinda like the Patriot Act) allowed CRA loans to be "securitized", or allowed Wall Street to slice and dice the loans so that they would be popular with institutional investors, resulting in more money available to loan money to people who never should have borrowed in the first place.
Rescind the CRA and its authority to allow the securitization of loans made as a result of its passage.
Still, the great majority rightly prefers peace, and we're suspicious of anyone who seems to be looking for excuses to go to war.
And we prefer freedom: a marketplace where we decide for ourselves how we deal with others. Those who seem to be looking for an excuse to put a gun to our heads and "regulate" us, are rightly viewed with the same suspicion as the war-mongers.
Stuart's "Random Thoughts" blog
http://stuart-randomthoughts.blogspot.com/
What industry in the USA has been deregulated?
The only industry I can identify that is least regulated by the government is the internet. It is wildly successful and expanding.
The real issue is how the government has screwed up its current regulation schemes. And the solution is not more 'fixing' but REAL deregulation.
Corporations WANT to use government power to protect their market share.
All you socialists go along with the idea believing if only the the 'right' people and the 'right' laws are written, the world will be perfect.
You as a consumer have the REAL power to regulate ANY corporation.
Did McDonald's stop using foam boxes because they wanted to or because customers demanded it? Did they start serving salads because the government wanted it or to attract customers?
Every industry that does not have some government protection, they must compete for customers, who are the real regulators of any economy.
Technically you're right: you don't raise $193 million from "Joe and Jill". Obama has only gotten about $130 million from us...so far.
Don't forget about those liberal fascists. They did their part.
And I'm sick to death of Wharton-grad, Masters-of-the-Universe, Wall Street types who, time and again, show us they care for nothing but short-term profit and their year-end bonuses...show us that, but for their own self-interest, they don't know s**t from Shinola.
Good God, after the last three months, when highly informed opinion has done everything but come right out and say that the whole damn house of cards may be about to come tumbling down, how can anybody in their right mind (thus excluding all of the money manipulators) have any doubt that the entire system is screaming out for tighter regulation?
And where, pray tell, does it say that tighter regulation necessarily means less innovation?
Has the most stringent regulation of the drug industry kept those companies from innovating, and making billions in the process? Obviously not.
The analogy is I think apt. The government tries extremely hard, and generally does a damn good job, to prevent the sale of snake-oil pharmaceuticals to consumers. Why should it not exercise similar regulatory authority over the peddlers of financial products and schemes which, according to consensus opinion, nobody even understands anymore?
At the end of this already miserable and even terrifying financial year, the money-changers will still gather in their New York haunts. Their steaks may be just a bit slimmer, their wines slightly downscale, and their cigars may be from the Dominican Republic rather than Cuba. Regardless, they will no doubt toast how smart they are, how even in a bad year they made good money.
Meanwhile the retirement dreams of many older folks, and the American Dream of many younger folks, will have gone up in smoke.
What these smug bastards need is a wholesale exodus by the people from the securities markets and into federally insured bank CDs. And hey, one could do worse! Like by continuing to invest in a market system which clearly is broken, rigged, and at least currently, and recently, is not even matching the returns of a passbook savings account.
When the risk/reward ratio shifts so dramatically in so short a period of time -- for no good reason other than that the gears installed in the clock are not properly working -- and when many and learned voices are calling into question the design of the clock itself, it would not be unreasonable for a reasonable person to decide to take their chances in Las Vegas. At least in Vegas one knows (or should know) the odds, and can limit one's downside by simply walking away from the table. Unfortunately, participants in 401(k)plans -- that is to say, the country's working class; i.e., the vast majority of Americans -- have no such option. They are unfortunately tied to the always greedy and often-as-not short-sighted and misguided machinations of, as noted above, a class of people (I use the word guardedly) who don't know s**t from Shinola, and worse, don't know that they don't know it.
Long before he got the boot, when he still thought he knew it all, former Secretary of Defense Donald Rumsfeld, at one of his press conferences, trying to educate what he clearly perceived as a press corps that was dumb and dumber, lectured them about how there were "known knowns, and known unknowns, and unknown unknowns."
Hmm. In retrospect it's clear that Rumsfeld and his patron knew next to nothing about what they were about, or how to get us out. All they were about were feeble attempts to try to explain what they thought they knew, which was nothing more than a lot of gibberish to mask the fact that they didn't know what they were talking about, let alone what they had haphazardly set this country about.
It's an Alice in Wonderland, Animal Farm, Brave New World time. And the best advice right now for anybody looking to preserve their money may well be akin to the assurances which, decades ago, Ed McMahon used to offer to Johnny Carson's Carnac the Magnificent with respect to the questions (answers) about to be asked; i.e., that they had been kept in a hermetically-sealed mayonnaise jar strategically placed under a mattress.
For these POLITICIANS to fall back to the position of
"how can we deport 12-20 million ILLEGAL ALIENS" proves what fools they
think we are. * No Deportation is Needed.*
Have you heard of the law passed in Arizona? Recently a delegation
from neighboring Mexican States were sent to Tucson to complain about
the massive return of immigrants to Mexico. The new law states a
business' second offense of employing illegal aliens puts the business
out of business. It caused a massive exodus of illegal aliens from
this state back to Mexico. The first offense is a fine the second
offense pulls your business license permanently. You can actually hear
English spoken almost everywhere now. If they speak Spanish out loud
they have their birth certificate in hand.
UPDATE:
--Arizona Law Appealed By Chamber Of Commerce-
ARIZONA FEDERAL DISTRICT COURT HAS UPHELD THE ARIZONA ILLEGAL
IMMIGRATION LEGISLATION CITING CONCERNS THAT WAGES OF AMERICAN
CITIZENS ARE BEING UNDERMINED BY BUSINESSES USING ILLEGAL ALIEN LABOR.
Have ICE agents follow up on Social Security numbers that do not match. An agent shows up a the place of business who has an employee with a SSAN that does not match the name, and say they will return in a few weeks to collect the $10K/day fine.
AZ, OK and now RI will begin to enforce US immigration laws.
“I am saddened…to…acknowledge what everyone knows: the Iraq war is largely about oil,” announced former U.S. Federal Reserve Chairman Alan Greenspan in 2007. It has become fashionable to blame the war on oil, or on a handful of warmongering neo-conservatives in the Bush administration.
But the problem is far deeper than the quest for oil, or the desires of a few rogue politicians in Washington. The broader problem is that of imperialism, which is rooted in protecting “free markets” at whatever cost, and is justified under the false pretenses of spreading “freedom and democracy.”
The USA and many other countries forced Iraq from Kuwait to "keep the free flow of oil at market prices".
Wouldn't an empire just take it?
So, why would anyone believe or trust Greenspan?
All the airlines are doing great after deregulation, and the employees are all well-paid. The planes might be older than I am (36), but we can be confident that the FAA is on the case keeping the maintenance top-notch. And whenever I have a problem, the customer service at the airlines fixes it right away - just like at every other big corporation - because they don't have to. Such a pleasure to travel these days, all thanks to deregulation.
Why, the banking and insurance corporations are doing swell after deregulation too. The S&L scandal was an isolated incident from the 1980's that the American taxpayer is still paying for, and sure the Asian's had a crash when they deregulated their banking and insurance industries, but it's not like the mortgage and financial corporations here have ever had a problem. American banking and mortgage companies are rock solid because we don't tell them what to do.
It's just like raising a teenager: don't enforce any rules and your teen will be at Yale in no time at all.
Let's not forget how well energy deregulation worked for Enron, Enron's employees, and the citizens of California. Where would Ken Lay's widow be if it wasn't for deregulation? Not sitting on millions of dollars, that's for sure.
Heck, the deregulations of fair trade laws have been just super for the American factory worker - there are jobs a-plenty and you wouldn't believe the high salaries! Without deregulation the hardworking slaves (almost) abroad, my nephew would never have the lead toys he enjoys so much.
And speaking of delicious but deadly, the FDA of the current administration has decided not only to deregulate as much as possible, but to stop enforcing existing regulations as well. Why there hasn't been a recall of meat at all this month. OK a few people died last year, but the good news is so did a bunch of dogs and cats! Isn't that great? Just when you were getting bored with your pet, now you can get a NEW dog or cat.
Euthanasia, thanks to youth in Asia, thanks to deregulation and unenforcement! That's global village goodness.
People also die from unsafe prescription drugs thanks to deregulation and unenforcement. "So?" as Cheney says. Think of the profits to be made and campaign contributions to be had. For the shareholders, it's like buying dead people for pennies a pound. Drug companies need that money to pay to fund their lobbyists. Deregulation and unenforcement isn't cheap you know. Do you know how expensive it is to get politicians to hire and appoint people to look the other way at regulatory agencies?
Poisoned toothpaste? So what? Who likes to brush anyway? For heaven's sake, everyone has dental insurance - just go in for an extra cleaning and keep the toothpaste locked up in the gun cabinet - wouldn't want the little ones to get their hands on something as dangerous as toothpaste.
By the way, antifreeze or lead: which has a sweeter taste? Only your kids know for sure, thanks to deregulation and unenforcement.
In fact, deregulation and unenforcement has worked so well for your children that the EPA has gotten into the act. If it wasn't for the EPA's unenforcement of its own regulations, do you think we'd have an entire generation of children with an epidemic of asthma?
What about the FCC? Do you think advertisers would have unmitigated access to your children, even in school? The junk food industry industry was made on the backs and bloated stomachs of fat children thanks to deregulation and unenforcement of the advertising industry.
What do you get when you mix fat, sugary snacks and unregulated children's advertisement? You get diabetes and hyperactivity...which in turn helps the drug industry.
See? It's corporate synergy at work, thanks to deregulation and unenforcement.
Deregulation and unenforcement doesn't stop at asthma, diabetes and hyperactivity, no sir! Mercury in the air, mercury in the vaccinations, lead in the toys - whatever doesn't kill your kids makes them stronger, right? So be sure to thank your politicians and corporate deregulation and unenforcement for this epidemic of children stricken by largely preventable diseases.
And when those wheezing kids grow up they can enjoy a tour (or two or three or four) in Iraq where they'll be served hot delicious food, clean water and enjoy all the comforts of home, courtesy of Halliburton, thanks to deregulation and unenforcement. Sure there have been a few scandals at Halliburton (or two or three or four or five) but I say, "Heckuva job, Halli!"
What better way to serve your corporate masters than to let them pay your politicians in Washington DC to let them do whatever the hell they want.
And if you complain, you might get to spend some time at Guantanamo Bay...thanks to deregulation of the Constitution and unenforcement of the Bill of Rights.