More to the point, if you believe my position, as as laid out in the book, is false or incorrect, than disprove it and spare us the rhetorical nonsense.

It was quite clear from the context of your prior comments — and your steadfast defense of Clinton for signing both GBL and CFMA bills — that you do not want to believe the repeal of Glass Steagall to be significant.

Have the courage of your convictions — either show that the Glass Steagall repeal was not significant, and that its perfectly okay to combine insured depository banks and riskier investment banks.

“I stand corrected (I overstated the case) The CFMA was attached not Christmas eve, but rather, on the eve of Christmas – just before Congress broke for the Christmas holiday. That does not change the fact is was passed essentially unread.”

The fact that it does not change is that if Clinton had vetoed the bill, and been slimed by the American RightWing for allegedly shutting down the federal government and leaving office with the federal government without a budget, it would have all been moot, as the incoming Republican administration and Republican Congressional Majority could have simply past the CFMA without delay.

“As to Glass Steagall, my case has been made in 322 pages. If you believe that Glass Steagall had no impact, I say you have failed to make that case – indeed, you haven’t even tried.”

“Sir, the burden of proof is on you to prove your theory that undoing the protective post Depression legislation at the behest of Citigroup had no impact on either Citi or the rest fo the finacial sector.”

Eh, what “case”, what “theory” ?

I merely posted that I had “yet to see a satisfactory argument”. I would be more than happy to defend any affirmative theory I present, if I had indeed presented one.

(I had added the facts behind the Commodity Futures Modernization Act of 2000, but it’s been covered. The problem with reading a bit then commenting w/out fully reading the thread ;))

~~~

BR: How does that rationalize his signing it? If you don’t believe in it, you veto it.

Also, good ole Senator Churk Schumer was a co-sponsor of the bill. Seems that Schumer keeps turning up whenever we try to trace congressional roots of the cause of the current debacle. I wonder if Krugman has had a follow up conversation with his good buddy Schumer about that bill way back in 1982?

http://www.nytimes.com/2008/10/03/business/03sec.html

The big five investment banks promptly levered up from 20:1 to about 30:1 leverage (debt to equity; higher if you use assets of course in the numerator). They had $4 trillion in liabilities when they went under; if you add another $5 billion for Fannie and Freddie, you have 7 bankrupt entities with $9 trillion in obligations. Yep, that is a crisis! All had embarrassingly small financial cushions and were essentially unregulated. As Krugman says, if it acts like a bank, regulate it like a bank.

Credit crises are about excessive leverage and lending based on asset values (houses in this case) rather than ability to repay. My view is that leverage restrictions can prevent this from recurring. For homeowners, an ironclad requirement for 20% housing down payment and income / net worth verification. A house is not an entitlement. Second, 8% common stock ratio for banks, which rises with the size of the institution. There is no reason for one of the top 4 mega-banks to have common stock ratios of 3-4%. That is a ridiculously narrow cushion. These are the two fundamental controls the system did not have and must be put in. Most other rules under consideration are window dressing. Put these controls in and you don’t need a systemic risk regulator or bank Sarbox or Basel III.

Long-Term Capital Management warned us in 1998 about the dangers growing in the highly-leveraged, derivative-bearing shadow banking sector, but we ignored it. That sector is now gone or going. Enron showed us the dangers of off-balance sheet financing and lending based on asset price rather than cash flow (loans to Enron were essentially secured with its stock, a real house of cards). Yet we let the big banks move over a $1 trillion off-balance sheet, a shoe that has yet to drop completely.

In the short run, we should realize that about 1/3 of the lending mechanism in the U.S. is gone (securitization of anything other than conforming loans) and we really don’t want it back. So spending a trillion dollars and planning trillion dollar debt increases annually forever is just ridiculous.

I would suggest that we all vote out any incumbent with over 8 years in the House or Senate in the next election and demand that Wall St. cease all lobbying activity until their common stock ratios are back to 8%.

@ 6:05 PM

that’s nice, and all, if one is content– hacking at branches.

why not expose the Root? you know, the one Created during another Christmas recess, now ~95 years ago, the FedRes ~?~

simply, without it, it’s “Member Banks” wouldn’t have dared to lever up, in such a way, as to make Archimedes look like a 3 yr-old with his first set of Lincoln Logs..
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Archimedes

“Actually CFMA was attached as a rider on Xmas eve, not 12/15.”

That would have be a nest trick, as the omnibus budget legislation, after being passed by the 106th Congress, was signed into law by President Clinton on December 21, 2000.

If by “Xmas eve”, you obviously mean December 24th, the legislation had already become law three days earlier.

“That the incoming GOP would have signed it is no excuse . . .”

I didn’t intend the point as an excuse. It merely makes whatever you might have wished or wanted Clinton to have done MOOT. We’ll have to disagree about Glass-Steagall. I’m still not convinced.

~~~

BR: I stand corrected (I overstated the case) The CFMA was attached not Christmas eve, but rather, on the eve of Christmas — just before Congress broke for the Christmas holiday. That does not change the fact is was passed essentially unread.

As to Glass Steagall, my case has been made in 322 pages. If you believe that Glass Steagall had no impact, I say you have failed to make that case — indeed, you haven’t even tried.

Sir, the burden of proof is on you to prove your theory that undoing the protective post Depression legislation at the behest of Citigroup had no impact on either Citi or the rest fo the finacial sector.

Good luck!

So China became a superpower because it was in the interests of the people that make up corporate America for them to become that. Also China’s rise gave rise to Walmart’s rise because Walmart would be the vehicle China would sell its goods to the people of the US. Walmart destroyed a lot of the economies in small towns because no longer did the money stay in the respective communities.

Then speculation via stocks and housing replaced real income while more and more Americans used debt to replace what used to be income.

The result is at this moment the US is a paper tiger with serious serious and massive problems (and if peak oil starts to play out like it appears to be doing, that’s gonna make things almost impossible to fix).

As for Reagan, I’d put a lot of the blame on him. Reagan was the one that sold and legitimized the idea to the public via his friends in the MSM that government was bad (and thus regulation and rules were an bad and an interference).

This was continued by GWB. If you want a good read of the criminality of the Bush-Cheney regime and what the disrespect they had for laws and regulations, pick up a copy of Free Money by David Cay Johnston to read about how the Bush – Cheney administration actively helped Enron massively ripoff the American people by refusing to crack down on Enron. Though Enron imploded through fraud, they had a real excellent business model: the license by the most powerful two peole in the world to massively ripoff millions of Americans each and every month via their utility bills. No wonder their stock price went so high, that’s a hell of an advantage to have.

Donna I totally agree with you too.