Deregulation and our Current Crisis
Before we begin, let me suggest that you take a quick trip to Devilstower’s page and get a black and white list of America’s accomplishments over the past 8 years and beyond. It’s impressive, to say the least.
Continuing from our discussion of credit’s effect on the economy, let’s look at the disastrous effect deregulation had on the current mess.
A quick trip down memory lane, or down the pages of Google, will remind us of the rigid and difficult changes that were necessarily implemented to lift us out of the last Great Depression. Of the many regulations implemented, most were geared towards reducing risk in the banking industry.These regulations helped usher in decades of safe and reasonable prosperity for America.
Before the last Great Depression, the banks were freed up to speculate to their hearts’ content. That was Free Markets at it’s height. Many banks had invested heavily in the real estate boom of the 20s. When home prices fell, like they did here the past 8 years, many of these institutions began to falter. At that time, many of the banks were closed for a banking-holiday and restructured to stop the run on the banks and to allow the banks to understand and make changes for the new regulations.
Also, at that time, the government stepped in and guaranteed the bank accounts, helping to restore some trust in the banking industry. Many of the banks were simply bought by our government and restructured and then sold when they were, again, profitable. It worked.
Nobody ever accused George Bush or the Republican party of being intelligent, but they could have at least consulted with someone who knew how to read history books. Instead, what they did was flood the faltering banks with billions of our tax dollars and never asked the banks to make a single change in their greedy and risky ways. Herbet Hoover all over again. Bush never even asked them what they were going to do with our money or even asked the banks to report on their progress. Sounds like a scam to me.
So, what are they doing? They’re buying up other banks (speculating) and giving themselves and their investors the money, billions of dollars. Does that sound like a scam to you?
When our banks start to falter and crumble like the 30s, Americans won’t panic quite as bad since our government is insuring our savings accounts. But they will still panic and we may be looking at another “Bank Holiday” to help prevent another run on the banks.
There is one more crutial aspect of this that needs to be addressed. The people who caused this mess, besides the Republicans who deregulated the banks, are a small group of greedy financiers, who prefer to be called “master of the universe,” who have made billion and billions of dollars off of this disaster. The money didn’t just disappear. These “masters” need to be investigated, their proceeds returned to the public, and criminal punishment rendered.
You must be wondering, by now, exactly what happened to all those regulations put into place after the last Great Depression. Remember all the cries for Let The MARKET Decide? Remember, all the huffing and puffing about “The FREE Market will fix it”? There have been numerous safeguards loosened up and many more just plain ignored by the Bush Administration, but the worst thing was actually done by a Republican Congress and a Democratic president, Bill Clinton. He allowed the repeal of the Glass Steagall Act which allowed the banks to get back into doing the same greedy things they did in the 20s and they have gotten stinking rich while our economy crumbled.