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Originally Posted by aceventura3
I have not seen the Rolling Stone article, but as the financial crisis gets studied what we will find is most of the problems revolve around the repeal of the Glass-Steagall act in 1999, signed by Bill Clinton, written by Republicans with virtually unanimous bi-partisan support. This allowed commercial banks to engage in investment banking activities, to date nothing has changed. The exposure of a catastrophic repeat is very real. Congress needs to act separating commercial banking activity from investment banking activity. This is not a "failed Bush administration policy" it is a failed banking policy. It would be nice for people to stop the blame game and get the job done. So, in spite of Obama's rhetoric we are still at risk, and I think or hope he knows it. Volcker seems to have Obama's ear and is certainty sending that message.
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ace...I am actually impressed that a free market, "no regs" guy like you is willing to acknowledge that the financial services modernization bill that effectively repealed most of Glass-Steagall was responsible for the abuses of the last 10 years.
IMO, it was compounded by Bush's SEC chairman turning a blind eye to those abuses.
And the economy was further adversely impacted in terms of debt/deficit by taking a budget surplus (and paying down the debt) and instead of continuing that policy, enacting the 01 and 03 tax cuts (at a cost of $1 trillion) that provided little or no stimulus...and an unnecessary invasion and occupation of Iraq (at a cost of another $1 trillion before its over).
But now that you recognize the impact of the de-regulation of the banking/financial services sector, are you ready to re-regulate?
The House passed a bill (with zero Republican votes) late last year that the WH supports.
The
Wall Street Reform and Consumer Protection Act addresses:
sub-prime lending - The bill outlaws many of the egregious and predatory industry practices that fueled the subprime lending boom and establishes a simple standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold
derivatives - the bill regulates the over-the-counter derivatives marketplace, requiring all standardized swap transactions to be cleared and traded on an exchange
bail-outs - the bill requires big banks and other financial institutions (with $50 billion in assets) to foot the bill for any bailouts in the future. These institutions would pay assessments based on a company’s potential risk to the whole financial system if they were to fail.
ponzi schemes - the bill strengthens the SEC’s powers so that it can better protect investors from Madoff type frauds
consumer protections - the bill creates a new Consumer Financial Protection Agency to protect consumers and small businesses by ensuring that bank loans, mortgages, credit cards are fair, affordable, understandable, and transparent.
This certainly is not the answer to the long-term need to retool the US economy....but it would help prevent a recurrence of those abuses.
---------- Post added at 10:44 PM ---------- Previous post was at 10:38 PM ----------
The Recovery Act was never intended to "fix" the economy, but rather to stop the free-fall, jump start the economy and put it in the right direction.
To that end, it included significant investments in alternative energy programs, health technology, a national broadband program, etc. where, in recent years, the US has fallen behind China, India, EU countries and even Iran (see below) in science, engineering and technology....IMO, these are essential to growing the economy in the right direction.
We are no longer the "great innovator" and if we dont address that fact, the long-term outlook for our place in a global economy is not good.
An interesting article (and report) on "geopolitical shifts in knowledge creation"
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Science-Metrix, a data-analysis company in Montreal, Canada, has published a detailed report (PDF) on "geopolitical shifts in knowledge creation" since 1980. "Asia is catching up even more rapidly than previously thought, Europe is holding its position more than most would expect, and the Middle East is a region to watch," says the report's author, Eric Archambault....
...Science-Metrix also predicts that this year, China will publish as many peer-reviewed papers in natural sciences and engineering as the US. If current trends continue, by 2015 China will match the US across all disciplines – although the US may publish more in the life and social sciences until 2030.
China's prominence in world science is known to have been growing, but Science-Metrix has discovered that its output of peer-reviewed papers has been growing more than five times faster than that of the US....
..."European attitudes towards collaboration are bearing fruit", writes Archambaut. While Asia's growth in output was mirrored by North America's fall, Europe, which invests heavily in cross-border scientific collaboration, held its own, and now produces over a third of the world's science, the largest regional share. Asia produces 29 per cent and North America 28 per cent.
http://www.newscientist.com/article/...y-country.html
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Knowledge creation (R&D) leads to job creation and a 21st century economy.
We better refocus our efforts and that takes both public and private commitments and investments!