Re: Soros

[David Farber <dave () farber net>]

Begin forwarded message:

From: Randall <rvh40 () insightbb com>
Date: October 7, 2008 10:08:59 PM EDT
To: David Farber <dave () farber net>
Cc: frode () hyperwords net
Subject: Re: [IP] Soros

On Oct 6, 2008, at 5:35 AM, David Farber wrote:

> From: Frode Hegland <frode () hyperwords net>
> Date: October 6, 2008 4:13:07 AM EDT
> To: Dave Farber <dave () farber net>
> Subject: Soros


> He states that credit creation is so important to the economy and  
> society that when those who create credit is in trouble the state  
> has to bail them out.
>
> Therefore those who create credit need to accept that they are under  
> state protection and that this comes at a price.
>
> This price is government anti-bubble control through regulation.
>
> Therefore the real debate should be about what kind of minimal  
> regulation is most effective at preventing these bubbles.
>
> IP thoughts on this?


From 1929 to 1931, hundreds or thousands of banks failed when  
depositors panicked and withdrew their money because they didn't want  
to be the last in line - the first guy to take his money out got his  
money, the later guys got nothing.

The Glass-Steagall Act was put into place to stabilize the  
situation.   Banks were forbidden to invest in anything other than  
loans and obligations of the US Government.   In exchange for this  
limitation, banks were offered the chance to buy insurance from the  
Federal Deposit Insurance Corporation.

About the same time, the Savings and Loans were chartered and insured  
by the Federal Savings and Loan Insurance Corporation - and they too  
were restricted in their investments. They could only make loans  
secured by real estate, and originally the interest rates they could  
pay on Certificates of Deposit were set by the federal government.    
How boring is that?

In 1981 or early 1982 those rules were loosened to the point of  
elimination.

A few years later the FSLIC went bankrupt and it cost the US  
Government $160,000,000,000.00 to bail them out.

Never prone to learning from mistakes, Congress in 1999 passed the  
Gramm-Leach-Bliley Act, which did away with Glass-Steagall.

Nine years later, we're staring at a default of the  
$56,000,000,000,000.00 FDIC - thanks to the repeal of Glass-Steagall.

When will they ever learn?

--
The war on privilege will never end. Its next great campaign will be  
against the privileges of the underprivileged. H. L. Mencken





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