Skip to content

Can the Financial Reform Bill Fix the Economy?

Preface: If you’ve been too busy to pay attention to the details, and if you’re hoping that the financial reform bill which has just been passed will fix the economy, this essay will bring you up to date.

Congress, Federal Reserve chairman Ben Bernanke, Treasury Secretary Timothy Geithner and the rest of the folks who run the economy are patting themselves on the back for passing the financial “reform” legislation.

Obama says it was “my policies that got us out of this mess.”

The new bill is widely described as the biggest change in how the economy is regulated since the Great Depression.

Is it true?

Unfortunately, as discussed below, none of our real economics problems have been addressed.

Consumer confidence is plunging again, and yet little in the legislation really restores trust in the system.

The poker game started breaking down because the wealthiest took all of the chips, and most people have no money to play with … but the bill does nothing to address the ever-widening gap in wealth.

The bill does little to restore the rule of law, which – as PhD economist James Galbraith notes – is a necessary ingredient in economic recovery.

Unemployment continues to plague the economy, because – even with the new bill- the government is feeding the parasite and killing the patient.

Main street continues to bleed because – instead of breaking up the too big to fails so that their dead weight stops suffocating the real economy (virtually all leading independent economists have said that the too big to fails must be broken up, or the economy won’t be able to recover, and see this) – the government has allowed them to get even bigger (and see this and this).

Indeed, just as BIS warned years ago, bailing out the banks has simply spread their problems into sovereign crises … and now the banks and governments are broke, and the global strategy of printing obscene quantities of money (“quantitative easing”) is debasing currencies worldwide.

“Deficit hawks” like top economic historian Niall Ferguson says that America’s debt will drive it into a debt crisis, and that any more quantitative easing will lead our creditors to pull the plug. See this, this and this. Indeed, PhD economist Michael Hudson says (starting around 4:00 into video):

If the problem that is grinding the economy to a halt is oo much debt, and if no one in the government – in either party – is looking at solving the debt problem, then … we’re going to go into a depression as far as the eye can see.

Yet the U.S. hasn’t reined in its profligate spending. While modern economic theory shows that debts do matter (and see this), the U.S. is spending on guns and butter.

As PhD economist Dean Baker points out, the IMF is cracking down on the once-proud America like a naughty third world developing country. (As I’ve repeatedly noted, the IMF performed a complete audit of the whole US financial system during Bush’s last term in office – something which they have only previously done to broke third world nations.)

On the other hand, “deficit doves” – i.e. Keynesians like Paul Krugman – say that unless we spend much more on stimulus, we’ll slide into a depression. And yet the government isn’t spending money on the types of stimulus that will have the most bang for the buck: like giving money to the states, extending unemployment benefits or buying more food stamps – let alone rebuilding America’s manufacturing base. See this, this and this.

Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers. (Not only has the government rewarded the gamblers, bailed them out and let them engage in a new round of risky betting, but it hasn’t even meaningfully reined in credit default swaps.)

Paul Volcker is warning that the watered-down Volcker rule (which won’t even kick in for some time) won’t prevent the next crisis. Similarly, one of the primary authors of the legislation – Chris Dodd – long ago said the bill wouldn’t prevent future crises.

Shady accounting is part of what got us into this mess … but as Citigroup Inc. analyst Keith Horowitz notes, banks are making huge amounts of money from an accounting rule that allows banks to book profits when the value of their own bonds falls.

High frequency trading is wrecking the markets … but isn’t addressed in the new legislation.

Neither is reforming money pits like Fannie and Freddie

The Fed is now warning that it could be 5 to 6 years before the economy recovers, and that there is a “significant downside risks” and a possible slide into deflation. That’s not a big surprise … Ben Bernanke doesn’t understand that liquidity was never the problem, and he has continued the same behavior which got us into this mess in the first place. Bernanke and the Fed have caused widespread destruction to the economy (see this, this, this and this). And yet the financial reform bill gives the Fed has more – instead of less – power.

Timothy Geithner was largely responsible for the crash and prolonging the crisis (see this, this, this, this, this, this, this, this, this and this) … and yet Geithner is being given more – instead of less – power by the new legislation.

Instead of becoming more democratic and more of a free market capitalist economy, the U.S. has become a a kleptocracy, an oligarchy, a banana republic, a socialist or fascist state … which acts without the consent of the governed.

No wonder the American and world economies are falling back into the double dip of a very nasty downturn.

And see this.

View the original article at Washingtons Blog

Related Posts with Thumbnails

Posted in Finance & Economics, Politics.

Tagged with , , , , , , .

Support #altnews & keep Dark Politricks alive

Remember I told you over 5 years ago that they would be trying to shut down sites and YouTube channels that are not promoting the "Official" view. Well it's happening big time. Peoples Channels get no money from YouTube any more and Google is being fishy with their AdSense giving money for some clicks but not others. The time is here, it's not "Obama's Internet Cut Off Switch" it's "Trumps Sell Everyones Internet Dirty Laundry Garage Sale".

It's not just Google/YouTube defunding altenative chanels (mine was shut), but Facebook is also removing content, shutting pages, profiles and groups and removing funds from #altnews that way as well. I was recently kicked off FB and had a page "unpublished" with no reason given. If you don't know already all Facebooks Private Messages and Secret Groups are still analysed and checked for words related to drugs, sex, war etc against their own TOS. Personally IU know there are undercover Irish police moving from group to group cloning peoples accounts and getting people booted. Worse than that I know people in court at the moment for the content they had on their secret private group. Use Telegrams secret chat mode to chat on, or if you prefer if you need to or buy a dumb phone with nothing for the NSA to hack into if you are that paranoid.

So if your not supporting this site already which brings you news from the Left to the Right (really the same war mongering bollox) then I could do with some. Even if it's just £5 or tick the monthly subscription box it will be much appreciated. Read on to find out why/


Any support to keep this site would be appreciated. You could set up a monthly subscription for £2 like some people do or you could pay a one off donation as a gift.
I am not asking you to pay me for other people's articles, this is a clearing house as well as place to put my own views out into the world. I am asking for help to write more articles like my recent
false flag gas attack to get WWIII started in Syria, and Trump away from Putin. Hopefully a few missiles won't mean a WikiLeaks release of that infamous video Trump apparently made in a Russian bedroom with Prostitutes. Also please note that this article was written just an hour after the papers came out, and I always come back and update them.

If you want to read JUST my own articles then use the top menu I have written hundreds of articles for this site and I host numerous amounts of material that has seen me the victim of hacks, DOS plus I have been kicked off multiple hosting companies, free blogging sites, and I have even had threats to cease and desist from the US armed forces. Therefore I have to pay for my own server which is NOT cheap. The more people who read these article on this site the more it costs me so some support would be much appreciated.

I have backups of removed reports shown, then taken down after pressure, that show collusion between nations and the media. I have the full redacted 28/29 pages from the 9.11 commission on the site which seems to have been forgotten about as we help Saudi Arabia bomb Yemeni kids hiding in the rubble with white phosphorus, an illegal weaapon. One that the Israeli's even used when they bombed the UN compound in Gaza during Operation Cast Lead. We complain about Syrian troops (US Controlled ISIS) using chemical weapons to kill "beautiful babies". I suppose all those babies we kill in Iraq, Yemen, Somalia and Syria are just not beautiful enough for Trumps beautiful baby ratio. Plus we kill about 100 times as many as ISIS or the Syrian army have managed by a factor of about 1000 to 1.

I also have a backup of the FOX News series that looked into Israeli connections to 9.11. Obviously FOX removed that as soon as AIPAC, ADL and the rest of the Hasbra brigade protested.

I also have a copy of the the original Liberal Democrats Freedom Bill which was quickly and quietly removed from their site once they enacted and replaced with some watered down rubbish instead once they got into power. No change to police tactics, protesting or our unfair extradition treaty with the USA but we did get a stop to being clamped on private land instead of the mny great ideas in the original.

So ANY support to keep this site running would be much appreciated! I don't have much money after leaving my job and it is a choice between shutting the server or selling the domain or paying a lot of money just so I can show this material. Material like the FSB Bombings that put Putin in power or the Google no 1 spot when you search for protecting yourself from UK Police with "how to give a no comment interview". If you see any adverts that interest you then please visit them as it helps me without you even needing to give me any money. A few clicks per visit is all it takes to help keep the servers running and #altnews alive!

However if you don't want to use the very obvious and cost free ways (to you) to help the site and keep me writing for it then please consider making a small donation. Especially if you have a few quid sitting in your PayPal account doing nothing useful. Why not do a monthly subscription for less money instead. Will you really notice £5 a month?

0 Responses

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

Some HTML is OK

or, reply to this post via trackback.