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FDR was no socialist, but, with the appointment of Marriner Eccles to the Fed, passage of Glass-Steagall, the creation of the SEC etc. he did put in place a system that worked until it was dismantled.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 5th, 2012 at 01:28:54 PM EST
[ Parent ]
It was a self-dismantling system. By the time the Kennedy administration banned racial discrimination in federal housing programs, hundreds of billions had been spent of which 2% went to non-whites. And that was the tip of the iceberg. And those New Deal created white suburbanites then became the base of the modern right wing Republican Party. At the same time, the massive concentration of finance on Wall St, partly due directly to New Deal regulations and partly due to the enormous accumulations of wealth from military industries, oil,real-estate, and even direct New Deal contracts ( H Ross Perot became a billionaire by ripping off Social Security and Medicare) increased the power of the FIRE sector. Ta da! It's also worth noting that the proximate cause of the 2007/8 collapse had nothing to do with behavior prohibited under Glass-Steagal.
by rootless2 on Sat May 5th, 2012 at 03:26:04 PM EST
[ Parent ]
True, that was behaviour prohibited under the anti-bucket shop laws.

I think that was a Roosevelt too, albeit a different one.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat May 5th, 2012 at 04:54:43 PM EST
[ Parent ]
The decision of the regulators to ignore AIG sales of CDS - essentially to operate a bucket shop - is one that shows the danger of GOP governance.  Laws on the books don't matter when not enforced.
by rootless2 on Sat May 5th, 2012 at 06:59:27 PM EST
[ Parent ]
It wasn't on the books when AIG started bucketeering. The Commodities Futures Modernization Act exempted swaps from bucketeering rules.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat May 5th, 2012 at 07:11:38 PM EST
[ Parent ]
http://www.npr.org/templates/story/story.php?storyId=104979546


The regulator "did not sufficiently assess the susceptibility of highly illiquid, complex instruments," to ratings downgrades, Scott Polakoff told the banking committee in prepared testimony today. "In hindsight, OTS should have directed the company to stop originating credit-default swap products before December 2005."

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDm4OdFvcWUw&refer=home
by rootless2 on Sat May 5th, 2012 at 07:26:25 PM EST
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Quote mining and Gish Gallop. Tiresome.

Are you seriously going to argue in a sober voice that the Commodities Futures Modernization Act did not matter to AIG's failure?

Would you also have argued that if it had passed in 2001 instead of 2000?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 03:38:50 AM EST
[ Parent ]
The law did matter, but the OTC and other regulators still could have taken action.
by rootless2 on Sun May 6th, 2012 at 08:46:31 AM EST
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With Timmy and Rubin running around in the administration?

Keep on dreaming.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 09:27:22 AM EST
[ Parent ]
2005 was during the Bush administration.
by rootless2 on Sun May 6th, 2012 at 10:20:19 AM EST
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When the Commodities Future Trading Commission tried to kill exotic derivatives in the latter half of the '90s, Rubin, Summers, Greenspan and Geithner told it to shit down and shut up while they legalised bucketeering.

Are you claiming the OTS would have had better luck under a Gore presidency than the CFTC had under the Clinton presidency? If so, on what grounds?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 10:37:44 AM EST
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Absolutely - because those guys were capable of changing their minds when data forced them to.
by rootless2 on Sun May 6th, 2012 at 10:52:15 AM EST
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The Russian experience with Messrs Summer, Rubin and Geithner argues otherwise. (Leaving Greenspan to one side, as you surely did not mean to include that Randian hack in your statement in the first place.)

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 10:59:45 AM EST
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Thanks - I did not mean to include Greenspan.

Even Clinton says derivatives dereg was a mistake.
http://abcnews.go.com/blogs/politics/2010/04/clinton-rubin-and-summers-gave-me-wrong-advice-on-deriv atives-and-i-was-wrong-to-take-it/

Even Rubin admits he was wrong although in his typically self-serving way
http://www.thedailybeast.com/newsweek/2009/12/28/getting-the-economy-back-on-track.html

While some people saw one or more of these factors, virtually no one involved in the financial system--whether institutions, investors, regulators, analysts, or commentators--recognized the breadth of forces at work or the possibility of a megacrisis, and this included the most experienced among us. More personally, I regret that I, too, didn't see the potential for such extreme conditions despite my many years involved in financial matters and my concern for market excesses.
by rootless2 on Sun May 6th, 2012 at 11:30:41 AM EST
[ Parent ]
Perhaps I misremember the American constitution, but I was of the impression that Al Gore would no longer have been president by the time Mr. Rubin allowed data to change his mind...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 11:36:37 AM EST
[ Parent ]
second term would have ended Jan 2009.
by rootless2 on Sun May 6th, 2012 at 11:55:06 AM EST
[ Parent ]

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