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Why I'm Concerned About an Obama Victory
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  Quote Guests Quote  Post ReplyReply Direct Link To This Post Topic: Why I'm Concerned About an Obama Victory
    Posted: 14-Oct-2008 at 09:50
Look, either way the next few years is the era of gov control, whoever comes into power. Could someone elighten me on how a mostly nationalised banking industry is likely to behave.
 
 
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Pretty much the same way as they usually behave. Private and public bureaucracies behave pretty much the same way, although generally speaking, public bureaucrats get paid less money.
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Posts: 3987 		  Quote hugoestr Quote  Post ReplyReply Direct Link To This Post Posted: 14-Oct-2008 at 12:27
Panther,

No offense, but how could this be something to fear? From the piece that you linked to:

But with the financial crisis, there is a much greater chance that electing Obama and the congressional Democrats will be like electing FDR in 1932.


You mean, the fear is that Obama may be the second coming of the greatest American president of the 20th century? The man who got saved country from the depression, won WWII, created social security and under whom the 8 hour week was establish?

The man who, ironically, made peoples lives so good that 50 years after he got into office the former poor felt that they were so well off that they started voting Republican? (Yes, Reagan must partially thank FDR for getting elected.)

Finally, let's go back to that "personal responsibility" value that Republicans said to value so much: if Obama can become one of the greatest presidents of the U.S. because of the financial crisis, the people responsible for that were the Reagan Republicans. Had the Reagan Republicans kept their hands off of the legacy of FDR in terms of financial regulation, the problems that we are living through wouldn't be here.
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Posts: 4221 		  Quote pikeshot1600 Quote  Post ReplyReply Direct Link To This Post Posted: 14-Oct-2008 at 15:25
Originally posted by hugoestr

Pretty much the same way as they usually behave. Private and public bureaucracies behave pretty much the same way, although generally speaking, public bureaucrats get paid less money.
 
The mechanics will be pretty much the same, but the public stake in the institutions involved will bring both increased oversight, and also political influence into the picture.  The first is good; the other not so much.  Commercial banking, in general, has been well regulated.  The wild west investment banks had been virtually unregulated for the last 12 to 15 years.
 
I know you dispise the Republican policies you blame for this mess, but the repeal of the Glass-Stiegle Act came under Clinton and with the blessing of the Treasury.  The Community Reinvestment Act was pushed by the Democrats to force banks to lend to to people who could not afford to borrow.  Not a good precedent.
 
Both these legislative actions were instrumental in the fiasco, and without doubt the current Repub administration is responsible for nonfeasance in regulatory duty.  However, in the absence of the Glass-Stiegle Act, they have had less to work with.  Now, as the "savior" of banking integrity through nationalization, they, as shareholders with Board of Director seats, have a fiduciary responsibilty.  Not that it will matter much to the rest of us...Doctrine of Sovereign Immunity, etc.  And you will never keep political influence out of it if the Feds have any substantial control.  Now, they have effective control.
 
 


Edited by pikeshot1600 - 14-Oct-2008 at 15:31
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Posts: 4221 		  Quote pikeshot1600 Quote  Post ReplyReply Direct Link To This Post Posted: 14-Oct-2008 at 15:29
hugo:
 
Incidentally (or maybe not incidentally Smile), I am not absovling anyone who lives beyond his means, or who satisfies his wants and affords his toys with credit.  That is another thread, more psychological and sociological than economic.
 
 
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Posts: 7035 		  Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 14-Oct-2008 at 16:06
Originally posted by pikeshot1600

Originally posted by hugoestr

Pretty much the same way as they usually behave. Private and public bureaucracies behave pretty much the same way, although generally speaking, public bureaucrats get paid less money.
 
The mechanics will be pretty much the same, but the public stake in the institutions involved will bring both increased oversight, and also political influence into the picture. 
I'm not sure what you mean here. The situation is rather different in the US from that in most of the countries that have considerable experience of nationalisation: for instance there's much less 'pork' and related activities based on constitutencies, and much less money spent on lobbying. So you may be right, but that's not strictly the result of nationalisation but of legislators running wild.
The first is good; the other not so much.  Commercial banking, in general, has been well regulated.  The wild west investment banks had been virtually unregulated for the last 12 to 15 years.
 
I know you dispise the Republican policies you blame for this mess, but the repeal of the Glass-Stiegle Act came under Clinton and with the blessing of the Treasury.  The Community Reinvestment Act was pushed by the Democrats to force banks to lend to to people who could not afford to borrow.  Not a good precedent.
The essential purpose of the CRA was to remove or reduce racial discrimination in lending my credit institutions. It wasn't designed to 'force banks to lend to people who could not afford to borrow', it was designed to encourage banks to lend to people who were being discriminated against o the basis of where they lived (code for colour of their skini).
 
Clinton signed the effective repeal of Glass-Steagall, but he didn't have much choice since it had a veto-proof majority. The Act itself was introduced by Republicans in both Houses, both of them controlled by Republicans, and had complete Republican support. It did however have quite a lot of Democratic support
 
Both these legislative actions were instrumental in the fiasco, and without doubt the current Repub administration is responsible for nonfeasance in regulatory duty.  However, in the absence of the Glass-Stiegle Act, they have had less to work with.  Now, as the "savior" of banking integrity through nationalization, they, as shareholders with Board of Director seats, have a fiduciary responsibilty.  Not that it will matter much to the rest of us...Doctrine of Sovereign Immunity, etc.  And you will never keep political influence out of it if the Feds have any substantial control.  Now, they have effective control.
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Posts: 3987 		  Quote hugoestr Quote  Post ReplyReply Direct Link To This Post Posted: 14-Oct-2008 at 18:30
Pike,

Aren't the unregulated market and small government what Reagan and the modern GOP have been all about for the last 28 years?

Or was Reagan's and the GOP support for neoliberal policies also Clinton's fault?
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Posts: 4221 		  Quote pikeshot1600 Quote  Post ReplyReply Direct Link To This Post Posted: 14-Oct-2008 at 23:25
Graham:
 
The repeal of the Glass-Stiegle Act was passed with President William Jefferson Clinton's signature on it.
 
He could have either vetoed the bill or let it become law without his signature.  The signature implies approbation.  Therein lies Democratic culpability.
 
 
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Posts: 4221 		  Quote pikeshot1600 Quote  Post ReplyReply Direct Link To This Post Posted: 14-Oct-2008 at 23:41
Originally posted by hugoestr

Pike,

Aren't the unregulated market and small government what Reagan and the modern GOP have been all about for the last 28 years?

Or was Reagan's and the GOP support for neoliberal policies also Clinton's fault?
 
I agree that Republican neo-lithic-con thinking is a very large factor.  Friedman and Hayek and others are theorists who harken back to a period that existed mostly in the imagination.
 
Economic liberalism, characteristic of the early 19th century, was only possible when (1) England produced almost all that could be got for the Industrial Revolution...no need for tariff barriers, and (2) the extraordinary situation after WW II when the developed world had destroyed itself except for North America.  If you wanted it you had to buy it here. 
 
Other than in those two periods, liberal political-economic thinking (or neoclassical/neocon if you want) had no validity, and, given human nature, deregulation never made any sense.  Once economies got so complex and sophisticated that non-specialists could not understand them, regulation was obviously required.
 
Baaaad neocons.  No reputation for you.
 
     
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Posts: 3987 		  Quote hugoestr Quote  Post ReplyReply Direct Link To This Post Posted: 15-Oct-2008 at 03:46
Pike,

The current crisis is mainly the project of Reagan and the modern GOP. I am sure that back in the 30s, there were many Republicans that also voted along with FDR; yet the New Deal is considered the work of the Democratic Party.

The same with radical deregulation and free market ideas. Did Clinton went along? Sure. He is a good politician and figured out that his time as president was a conservative one, so he adapted. Clinton was a pretty conservative president; the best conservative president in the last 30 years, I would add.

But as the Congress since 1994 and the elections since Clinton left showed, since the 1980s, we have been living through the GOP re-invention of the U.S. After all, "liberal" became an insult during this period.

What we are seeing now is the Reagan Conservatism, the dominant ideology since the 1980s, coming to its logical conclusion.

Ironic, if you think about it: FDR's policies saved capitalism, and Reagan's are about to kill it.
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  Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: 15-Oct-2008 at 08:24

Nationalised banks in the US could be worse in many ways, political pressures would be immense, as GLCE2003 says. However it is true that the dismantling of the regulatory structure had a lot to do with this mess. There was a LOT of overregulation in the 1970's,  but somewhere between 20 Jan 1981 and last month the deregulation line was crossed.
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  Quote Guests Quote  Post ReplyReply Direct Link To This Post Posted: 15-Oct-2008 at 08:29

glce2003, racist or not the CRA led to a culture of "lend now, worry about collateral later". Its all well and good to open up access to people. But its becoming ridiculous. Asset less mortgages in the UK for instance, giving people with no assets, 60,000 pound mortgages, essentially everybody was living well beyond their means.

 
 
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Posts: 4221 		  Quote pikeshot1600 Quote  Post ReplyReply Direct Link To This Post Posted: 15-Oct-2008 at 14:51
Originally posted by Sparten

glce2003, racist or not the CRA led to a culture of "lend now, worry about collateral later". Its all well and good to open up access to people. But its becoming ridiculous. Asset less mortgages in the UK for instance, giving people with no assets, 60,000 pound mortgages, essentially everybody was living well beyond their means.

 
 
 
Agreed.  The public bailout of the thrift industry in the 1980s sent the message that if you screwed up the Feds would step in.  The message was received both by the bankers who had direct contact with the regulators and the FDIC, and by many borrowers who bought huge houses with no money down, and uncertain mortgage obligations such as variable rates.  If real estate values dropped or they got into other trouble, someone else had to "do something" to help them.
 
 
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Posts: 7035 		  Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 15-Oct-2008 at 15:41
Originally posted by pikeshot1600

Graham:
 
The repeal of the Glass-Stiegle Act was passed with President William Jefferson Clinton's signature on it.
I didn't deny it. I also pointed out it had a veto-proof majority, which in the circumstances of the time meant it was largely bipartisan. However it was introduced by Republicans (Phil Gramm and I forget who in the House) and had to be toned down some to get Democratic support.
 
He could have either vetoed the bill or let it become law without his signature.  The signature implies approbation.  Therein lies Democratic culpability.
However, that doesn't diminish Republican responsibility.
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Posts: 7035 		  Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 15-Oct-2008 at 15:47
Originally posted by Sparten

glce2003, racist or not the CRA led to a culture of "lend now, worry about collateral later". Its all well and good to open up access to people. But its becoming ridiculous. Asset less mortgages in the UK for instance, giving people with no assets, 60,000 pound mortgages, essentially everybody was living well beyond their means.

True, but the UK had no CRA. It's blaming the situation on the CRA that I'm objecting to. The CRA was originally passed under Carter. The distortions you're talking about developed under right-wing governments in both the US and the UK (counting Blair as right-wing).
 
Delete 'led to' and put 'was followed by' and I can only agree with you.
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Posts: 7035 		  Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 15-Oct-2008 at 15:49
Originally posted by pikeshot1600

[QUOTE=Sparten] glce2003, racist or not the CRA led to a culture of "lend now, worry about collateral later". Its all well and good to open up access to people. But its becoming ridiculous. Asset less mortgages in the UK for instance, giving people with no assets, 60,000 pound mortgages, essentially everybody was living well beyond their means.
 
 
Agreed.  The public bailout of the thrift industry in the 1980s sent the message that if you screwed up the Feds would step in. 
[QUOTE]
Would you like to point out who sent the message?
 
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Posts: 818 		  Quote Panther Quote  Post ReplyReply Direct Link To This Post Posted: 16-Oct-2008 at 00:12
Originally posted by hugoestr

Panther,

No offense, but how could this be something to fear? From the piece that you linked to:
 
None taken, hugo my friend.
 

But with the financial crisis, there is a much greater chance that electing Obama and the congressional Democrats will be like electing FDR in 1932.


You mean, the fear is that Obama may be the second coming of the greatest American president of the 20th century? The man who got saved country from the depression, won WWII, created social security and under whom the 8 hour week was establish?
 
Respectfully, those are just opinions Hugo. Did he save us from the depression? Alot of people would and are starting too say no, he only made the recovery that much more worse and only after we entered WW2 did the effects of the depression fade from memory. Did he win the Second war single handily (My emphasis)? Again no, not without alot of help from our major allies. I'll give you social security, that is one of his few policies that have remained very popular to this very day. I thought it was under Truman administration that saw the implimentation of the 40 hour work week?
 

The man who, ironically, made peoples lives so good that 50 years after he got into office the former poor felt that they were so well off that they started voting Republican? (Yes, Reagan must partially thank FDR for getting elected.)
 
Well, i wouldn't generalize the fickle reasons as too why any groups decide to change their votes. Though you are right, Mr. Regan was a big FDR supporter back then.
 

Finally, let's go back to that "personal responsibility" value that Republicans said to value so much: if Obama can become one of the greatest presidents of the U.S. because of the financial crisis, the people responsible for that were the Reagan Republicans. Had the Reagan Republicans kept their hands off of the legacy of FDR in terms of financial regulation, the problems that we are living through wouldn't be here.
 
If Mr. Obama is elected and can become one of our greatest Presidents, then he will deserve any credit that he might have coming to him? Besides, it seems that financial regulation and the corruption that has stemmed from it, is a problem that were caused and has effected both parties and not specifically only caused by only one! My main problem with this election isn't that only one party is getting tainted with bringing on all our financial problems. No my main problem is that so many people believe in it so blindly that only half of the problem might be swept out come this Novermber, but the other half will remain. No lessons being learned & nearly unchecked power to one party for the next couple of years. Has anything been learned, and if so... what are the ideas too effect a solution acceptable to either parties? Of course, we can always be lied too once it has served either political parties interests and be lulled back into a fitful slumber until a similar problem rises again and again and again and again and...
 
If the Democrats are smart, then they will learn from the Republicans mistakes from the mid-90's to 2006 time period? One of my many question is, will their constituents punish the Democrat politicans if they let their voters down, most especially in rooting out the corruption amongst themselves? I certainly like to think so!
 
Respectfully,
Panther
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