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"President Obama: Where Are The HANDCUFFS?


Highlights of an excellent article.  Suggest reading it in full if you have time.


Thursday, April 22. 2010

Posted by Karl Denninger in Politics at 12:15

Source The Market Ticker

"President Obama: Where Are The HANDCUFFS?

So the speech now has been given....  Let's analyze it:

Since I last spoke here two years ago, our country has been through a terrible trial.  More than 8 million people have lost their jobs.  Countless small businesses have had to shut their doors.  Trillions of dollars in savings has been lost, forcing seniors to put off retirement, young people to postpone college, and entrepreneurs to give up on the dream of starting a company.  And as a nation we were forced to take unprecedented steps to rescue the financial system and the broader economy.

Yet those who committed the acts that led us to this terrible place, that is the bankers, even when bribery of public officials was going on and the bankers knew it, have not been indicted or prosecuted.

Instead, we bailed them out.

As a result of the decisions we made - some which were unpopular - we are seeing hopeful signs.  Little more than one year ago, we were losing an average of 750,000 jobs each month.  Today, America is adding jobs again.  One year ago, the economy was shrinking rapidly.  Today, the economy is growing.  In fact, we've seen the fastest turnaround in growth in nearly three decades.

We blew $1.5 trillion a year, or about 10% of GDP for the last two years.  President Obama's policies in this regard are a mirror-image of George Bush's, and of course GDP appears to be "growing" when one does this.  But this is no more "growth" than it is when you take a cash advance on your credit card - it is simply pulled-forward demand, and now the economy has become dependent on it. 

Again, these policies are an extension and in fact an engrossment of what George Bush did.  Proof is right here: ....................."

".............Indeed, the acts of the last decade can be best characterized as financial terrorism, and instead of meeting this challenge head-on our government has cowered under the desk. .............."

"..........I don't care how much anyone makes - so long as the income is earned honestly.  I care very much when it is "earned" by various schemes, including felonious ones that (in some instances) included outright bribery - yet the banking system people who made that money not only are not prosecuted they get to keep the ill-gotten gains!

I'll close by saying this.  I have laid out a set of Wall Street reforms.  These are reforms that would put an end to taxpayer bailouts; that would bring complex financial dealings out of the shadows; that would protect consumers; and that would give shareholders more power in the financial system.

No they won't.  In order for that to happen, WE NEED TO SEE HANDCUFFS.

There has always been a tension between the desire to allow markets to function without interference - and the absolute necessity of rules to prevent markets from falling out of balance.


Re-impose Glass-Steagall.  17 pages of legislation that kept the system safe and sound for FIFTY YEARS.

We started dismantling it in the 1980s by circumventions and outright unlawful acts including Alan Greenspan granting an illegal waiver to legitimate an illegal merger.

This culminated in Gramm-Leach-Bliley and the Commodities Futures Modernization Act - the latter overruling anti-bucket-shop laws put in place to prevent the precise same acts that caused the meltdown in 1929.  As one would expect, we got the same result we had in the 1920s. 

Seventeen pages Mr. President. 

Re-enact Glass-Steagall  - the original seventeen pages.  No ifs, no ands, no carve-outs, no buts, no exceptions and no edits.


Without them you have fixed nothing."


Entry #1,761


emilygComment by emilyg - April 23, 2010, 7:26 pm
Thank you.
konaneComment by konane - April 23, 2010, 8:10 pm
Thanks Em!

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