We, as a nation, went through the Great Depression, sure, as we all know.
And with the collapse of the stock market back in 1929, there were examinations of what was done wrong and then we made laws to make sure we didn't do that again.
That makes sense, doesn't it?
So now we've experienced the worst collapse and decline of our economy since that Great Depression, some 80 years ago and what do we do?
Nearly nothing.
Since our economy collapsed, mostly due to banks, the banking industry and the big banks, in particular (read: Goldman Sachs, Citigroup, etc.), there hasn't been one new law put in place--or put back in place--since.
It's only just now, this week, that we're examining what happened and finding out who did what, when, where and to whom.
Some of it we've known for a long time but this Financial Crisis Inquiry Commission's role is an important one--and long overdue.
One of the worst things that was done was this: "...Wall Street's biggest investment banks bought many of the $2 trillion in home mortgages issued to shaky borrowers, converted them to high-yield bonds and sold the bonds to investors including pension funds, insurers and foreign banks. Many of the securities have since defaulted, and investors have lost billions of dollars.
Goldman Sachs even admitted improper actions in the sales of securities, for pity's sake, earlier today.
This was all nightmare enough but then they had to add credit default swaps to this list.
Instead of truly having and buying insurance, for which there are regulations and rules, these companies bought these "swaps", which weren't regulated, as a substitute for true, real, backed insurance.
Only the swaps weren't backed.
There was nothing behind them.
With these 2 details alone--and there was a lot more done blatantly wrong --is it any wonder our banking system and so, our economy, collapsed?
So the thing that's wrong now is that 1) nothing has changed yet, from when these large banks took us all for a ride, so to speak, to all of our peril, for which we are now paying and have to pay and will have to pay, into the future and 2) unlike after the Great Depression, we're letting the banks and their lobbyists and their money into our government, to tell us what should happen with THEIR regulations.
Does this make any sense?
And the answer is, of course not.
80 years ago, we had enough sense to correct our problems and to keep the proverbial fox out of the chicken coops.
We don't seem that smart this time around.
We don't seem to have learned that you don't let the person who made the mess in the first place make the rules for the future in order to avoid future collapses and problems.
That's not very bright, on our part.
Subscribe to:
Post Comments (Atom)
Posts
2 comments:
We need to simplify financial laws, not add another layer. The more complex the laws are, the more they benefit the biggest and least ethical companies.
If we add a law to "fix" default credit swaps, the biggest players will surely find a way around it. Endless cycle. Do the same thing will get the same results.
Instead of more rules regarding behavior, we need rules regarding dilution of risk. Companies should be able to do risky things, but they and their shareholders should be the ones to bear the risk. When we bail out companies, we encourage riskier behavior, since we reduce the downside without also reducing the benefits.
credit default swaps are stupid and irresponsible. they should be outlawed. true insurance would do what these were supposed to, first.
second, we need to put back in place the laws we passed after the Great Depression, which we eliminated in the 80's and 90's, foolishly enough.
it isn't that complicated.
Post a Comment