McCain, Obama blast regulators, managers for Wall Street woes

[maldon_road]

Would you trust either of these guys to take on big business?

I heard McCain today. John the Populist. Praised the American working man, condemned "corrupt" Wall Street, talked of former Congressmen now in prison and said that he would "do something" about multi-million dollar bonuses.

Like what?

The CEO of Lehman got $22 million in bonuses last year. Today 25,000 employees of the company heard that soon they will be without jobs.

McCain, Obama blast regulators, managers for Wall Street woes

Sens. John McCain and Barack Obama on Monday both blasted regulators and managers for failing to head off the financial woes rocking Wall Street and called for an overhaul of the rules governing financial institutions.

Sen. Barack Obama says Monday in Grand Junction, Colorado, that regulators weren't "minding the store."

The presidential nominees' calls for reform came as Lehman Brothers, a 158-year-old investment bank that has been a pillar of Wall Street, announced Monday it was filing for bankruptcy, while Bank of America said it was buying another Wall Street institution, Merrill Lynch...

Obama, the Democratic presidential nominee, blamed the turmoil on Wall Street, saying it's "more evidence ... that too many folks in Washington and on Wall Street weren't minding the store."

"For eight years, we've had policies that have shredded consumer protections, that have loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans," the Illinois Democrat said during a rally in Grand Junction, Colorado. "The result is the most serious financial crisis since the Great Depression."

Obama has called for modernizing regulations "to suit a 21st-century market" to protect investors and consumers.

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McCain, the Republican presidential nominee, told supporters in Jacksonville, Florida, that the problems facing Wall Street would not occur again if he became president.

"You know that there's been tremendous turmoil in our financial markets and Wall Street. People are frightened by these events," McCain said. "Our economy -- I think still, the fundamentals of our economy are strong -- but these are very, very difficult times. And I promise you we will never put America in this position again."...

The news of more troubles on Wall Street comes as voters place the economy as their No. 1 concern. More than half, 56 percent, of voters surveyed September 5-7 in a CNN/Opinion Research Corp. poll placed the economy as the most important issue....

Economy

[capricorn]

What??? You mean it's not Dubya's fault???

[jdobbin]

What??? You mean it's not Dubya's fault???

You think it has nothing to do with how the federal government in the U.S. operates?

[bush_cheney2004]

You think it has nothing to do with how the federal government in the U.S. operates?

Yes and no....we can trace the current debacle back to the erosion of firewalls erected after the Great Depression (e.g. Glass Steagull Act). The US federal government did not invent complex derivatives, but it has been known to deficit spend.

All of which happened before Bush came along.

[Topaz]

Wasn't there a conspiracy going around that the US $$ would be devalued and it would have to turn to the Euro only until it had Canada and Mexico to get on side to switich to the AMERO??? Could this be the starting of it??? Keep your tinfoil you may need it and your toaster.

[Rue]

Yes and no....we can trace the current debacle back to the erosion of firewalls erected after the Great Depression (e.g. Glass Steagull Act). The US federal government did not invent complex derivatives, but it has been known to deficit spend.

All of which happened before Bush came along.

True. But the actual inception of junk bond traders and moving away from bank regulations to allow the large brokerage houses, mortgage houses and hedge fund operators to operate outside banking regulation and run started with your dear friend Ronny, then George Sr., then Billy Boy, and then Georgie Jr. They all had regimes that facilitated this current debacle and it comes down to one ironic thing - this blind American obsession not to regulate because that would be socialist has led Georgie boy to do what? Why nationalize of course! Say isn't that socialism? Can it be?

Point is, the the decision of Reagonomics to prevail is what is at the roots of all of this. Reagonomics believed competition alone would self-regulate greed and dishonesty. Uh yah. Fat chance.

Y'all don't have to be a genius to figure out what fueled these debts. Whether you were a business or person, in the U.S. suddenly unregulated traders running amuk were offering junk bonds, junk mortgages and credit to anyone and everyone.

Now people who could not afford things and still can't suddenly could get loans for anything they wanted.

Unlike here in Canada with we pinko communists where our regulations prevented this from happening, in the US y'all had thousands of questionable banks and money lenders suddenly spring up.

Hey look around. Less than 12% of the US GNP comes from manufacturing! Its all coming from trading these junk securities!

Hey when we pinks here in Canada and for that matter the British, French, Dutch, Belgians, Germans to name but a few, not to mention numerous bank and financial associations tried to warn George Jr. to put some controls down on these traders he stated no way and that it was not a problem!

Uh huh. Now this same monkey boy is saying psst, I need to socialize and guess what, my buddy Bush Chaney is gonna pay out of his taxpayer pocket for the 700 billion I want and never mind when my bail our request is done that will bring the US debt to $18 trillion. And the 17 to 18 billion currently being spent to finance Afghanistan and Iraq each month, oh well.

Look I am not beings mug. We Canadians have our own serious problems and are on the verge of re-electing some guy who thinks Bush economics are wonderful because he is a Reaganomics fan. Good Lord, the US collapses and we are going to elect someone who wants to engage in the exact same policies leading to this collapse. Its enough to cause hemmeroids.

The solution? Well gosh darn it I think that nasty R word, and I do not mean Reagan but regulation seems to be part of that solution. That and all of us learning to stop borrowing for things we can't afford.

I would also like to see all the oil day traders castrated.

[August1991]

True. But the actual inception of junk bond traders and moving away from bank regulations to allow the large brokerage houses, mortgage houses and hedge fund operators to operate outside banking regulation and run started with your dear friend Ronny, then George Sr., then Billy Boy, and then Georgie Jr. They all had regimes that facilitated this current debacle and it comes down to one ironic thing - this blind American obsession not to regulate because that would be socialist has led Georgie boy to do what? Why nationalize of course! Say isn't that socialism? Can it be?

Point is, the the decision of Reagonomics to prevail is what is at the roots of all of this. Reagonomics believed competition alone would self-regulate greed and dishonesty. Uh yah. Fat chance.

Y'all don't have to be a genius to figure out what fueled these debts. Whether you were a business or person, in the U.S. suddenly unregulated traders running amuk were offering junk bonds, junk mortgages and credit to anyone and everyone.

Now people who could not afford things and still can't suddenly could get loans for anything they wanted.

Unlike here in Canada with we pinko communists where our regulations prevented this from happening, in the US y'all had thousands of questionable banks and money lenders suddenly spring up.

Hey look around. Less than 12% of the US GNP comes from manufacturing! Its all coming from trading these junk securities!

What nonsense. In many ways, governments regulate US banks more stringently than Canadian banks. For example, American banks must meet certain reserve requirements whereas Canadian banks have none. American banks are resricted in where they can do business whereas Canadian banks must only meet foreign ownership requirements. I grotesquely simplify.

In the 1930s, in the midst of the Great Depression there were similar arguments that capitalism was a doomed failure and State planning and regulation were the only way forward. The Soviet Union made a mockery of those arguments.

Today, we are still far away from a depression. People get up, go to work produce services and goods of value to humanity. The average American creates value in a single day of work (usually providing a service, not a manufactured product) that is equivalent to only a few countries a round the world.

Financial markets are prone to unstable bubbles and panics. In recent memory, we had one in 1987 and in 2001. Famously, there was one in 1929. The danger is that a panic spreads into the world where people get up and go to work. It happened in 1929 but it didn't in 1987.

This particular bubble - based on real estate values - is particularly pernicious since mortgages make up such a large part of the US financial system - about 50% by my last reckoning.

Is good government regulation good? In general no, I would say. One can argue that government regulation of financial institutions caused this current crisis. I'm inclined to believe that financial bubbles and panics are inevitable and government regulation cannot eliminate eliminate them and may even exacerbate them. OTOH, government timely intervention once a panic sets in can certainly make things worse (ie. 1929) or possibly prvent them from spreading to real decisions of people (ie. 1987).

Underneath all, the US Fed (ie. the State) issues our base currency. The US Fed is the lender of last resort. When it comes to this fundamental question of trust, we look to the State for certainty. the State alone among institutions is backed by the ability to tax all individuals.

It seems inevitable to me that the State will have to provide confidence when people's trust in financial institution is shaken.

People will do crazy things for a mere piece of paper because it happens to be green and have a gravure of Benjamin Franklin on it. The reason people want this piece of paper, ultimately, is their trust in the State.