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Achieving a Democratic House will be a great plus for the economy, as it will enable at least some sane fiscal policy to be implemented, which will help greatly. But it won't deal with the greatest problem - returning the rule of law to the financial sector. I could be surprised and find that Hillary appoints an Attorney General who really goes after financial and control fraud. If so I will gladly eat my words, but it is not what I expect.

Given that the financial sector is currently acting like a 30% VAT on the real economy, it is important that it be put back in the box FDR had built for it - preferably a greatly improved box suitable to the changed circumstances. Note that well over half of the wealth extracted from the real economy by the fiancial sector is lost for many years by being tied up in offshore havens or in overpriced assets. Cutting finance back to what it was in 1980 even would be a massive stimulus to the US economy.
 

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 20th, 2016 at 08:03:03 PM EST
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What has prevented Obama from acting more decisively in this regard, especially in his second term when no longer dependent on Wall Street donations? Is your argument that he has been ideologically captured?

Or has he simply taken the pragmatic view that prosecuting a few banksters is uncertain of success, unlikely to change much in the real economy, and if anything, more likely to hinder economic recovery by propagating the meme that his administration is anti-business?  The EU experience of prosecuting banksters is even more anaemic, if anything...

FWIW my experiencing of working in an (EU headquartered) non-financial global multinational is that they were quite scrupulous about obeying the law in all lands they operated in. They might lobby for laws more favourable to their business, but would never countenance actual law breaking. They were also quite in favour of strict enforcement of what regulations did exist, as allowing others to flout the law would place them at a competitive disadvantage.

Outsiders frequently view big business lobbies as one coherent organisation, whereas in practice there can be fierce competition between businesses, and fierce resentments stirred up if a competitor is seen as having gotten away with some infringements as this places the whole industry in disrepute as well as "unfairly" advantaging the miscreants.

Thus I am not convinced that the financial sector as a whole would have a problem with the strict enforcement of existing regulations (such as they are) or with the severe punishment of those who flout them.  In fact there could be considerable frustration at the lack of enforcement.  

But then again, US big business could be very different. Senior US businessmen operating in Europe frequently had the reputation of being very right wing, very doctrinaire in their approach, not very culturally sensitive, very egotistical, and often not very bright.  But I digress...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri May 20th, 2016 at 08:41:00 PM EST
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Frank:
What has prevented Obama from acting more decisively in this regard, especially in his second term when no longer dependent on Wall Street donations? Is your argument that he has been ideologically captured?

Yes! Ideologically AND aspirationally captured since childhood. His grandmother, a good woman, was a bank executive and that set his immediate predisposition. His education likely taught him that the path to success in the USA was through serving the needs of the wealthy, at least in part, and then he was virtually adopted as a young community activist on the south side of Chicago by the Pritzker family.

He facilitated the Pritzkers making hundreds of millions of dollars via 'redevelopment' of federal housing projects in south Chicago and adjoining cities. That resulted in the ouster of many longtime black community members who could no longer afford to live in the area. But he became known to the very upper class in Chicago and this paved the way for his political career in Ilinois state politics and then in national politics. And Penny Pritzker got to be Secretary of Commerce.

All through his '08 presidential bid, once he emerged as a viable candidate, he was on the phone weekly to financial sector CEOs such as Jamie Dimon, Lloyd Blankfein, etc. and as soon as Bear Stern raised its bloody spectre he was assuring them that he would be there for them in a crisis if he were the president.

He could easily have ordered investigations and prosecutions for control fraud that would have led to such notables as Jon Paulson of Abacus fame and Alec Litowitz, head of Magnetar Capital of the famous Magnetar Trade. Both were the subject of SEC investigations and snactions, really slaps on the wrist. Instead we got 'regulatory forbearance' on the dubious theory that prosecuting financial criminals would further destabilize Wall Street.

Naturally, when control fraud has become the business model and rule of law no longer applies to certain people, enforcing the law will destabilize that situation. But the end result would be a much healthier economy. And that is the essence of my objection to Obama. A former professor of contitutional Law at the University of Chicago has presided over the destruction of the rule of law in US finance.

Even if all of this comes out, prosecutions result in convictions and all the gory details in lurid detail present in newspapers of record, Obama will have made out like a champ. Even if there is a cloud over his legacy, his family will forever be a part of the elite, he will have a Presidential Library that will probably outshine Clinton's, he and Michelle will retire as multimillionaires and philanthropists and his children will benefit from his legacy. And he is counting on all of this.

If you wish I can later add links to the above claims, but now need to get out to my garden before I lose the day.


"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 21st, 2016 at 10:16:31 AM EST
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