Wednesday, July 14, 2010

Financial "Reform" Bill Has the Votes

It apparently took more than the usual amount of pictures from the office party and horse's heads left in select beds - er... negotiation - to get the 60 votes needed to clear the senate for the financial reform bill
Reform?  Not really.
Those fine folks over that Economic Collapse blog fisk it pretty thoroughly, and it's worth a read. 
But U.S. Senate Majority Leader Harry Reid is making this sound like this is some kind of history-changing legislation....
"We’re cleaning up Wall Street."
Oh really?
Charles Geisst, professor of finance at Manhattan College recently had the following to say about this absolutely toothless bill....
Like health-care reform, this bill is being drawn up to grab headlines but its details betray it as nothing more than a slap on the wrist for Wall Street. It is true that Wall Street can commit grand theft and apparently get off with nothing more than community service.
Does anyone really expect the same people who wrote the laws that screwed up everything in the first place to do better now?  When they are concurrently running investigations into what happened?  Out here in fly-over country, we don't try to fix something until we know what broke.  Just sayin...
The financial reform bill creates a new Bureau of Consumer Financial Protection at the Federal Reserve that is supposed to help prevent abusive lending by mortgage and credit card companies.  (Wait a second - this bill gives the Federal Reserve more power?  Who came up with that grand idea?  Yeah, let's give the fox more power to guard the hen house.  The truth is that the Federal Reserve is one of the core problems with our economic system)
Oh, great.  The Federal Reserve's whole reason for existence is supposed to be to prevent bubbles.  Instead they have caused every bubble, every recession and depression since 1913. 

The financial reform bill does nothing about the horrific bubble in the derivatives market.  Originally it was believed that some tough regulations were going to be imposed on derivatives trading, but the Wall Street lobbyists were all over those provisions like rabid dogs.
So now there is loophole after loophole in the bill and the "derivatives problem" still ominously hangs over Wall Street.  Not that there is any way to fix it.
Nobody actually knows the true total value of all the derivatives in the world, but estimates place it at somewhere between 600 trillion dollars and 1.5 quadrillion dollars.
When the derivatives bubble pops, and it will, there won't be enough money in the entire world to fix it.
One professor quipped "the banks have won". 

Also, the way I figure it, with health care at about 20% of the economy, the automobile sector, Fannie Mae and Freddie Mac holding virtually all of the mortgages in the country, the takeover of AIG (big insurance) and now the financial sector, I do believe this puts the government in direct or indirect control of over 60% of the economy. 

Congratulations, you now live in a socialist country. All hail the collective.  I, for one, welcome our insect overlords. 

Wait.  Wrong movie. 

Finally, let me leave you with a fun fact, from this excellent column, The 50 Ugliest Things About the US eCONomy. Did you read that the US debt went over the $1 Trillion dollar line earlier this month? 
#47) In fact, if you spent one million dollars every single day since the birth of Christ, you still would not have spent one trillion dollars by now.
In an early college class in Physics, in the early days of calculators in class (really...) we calculated the number of seconds in a year.  It's a handy number to know, and is within 1% of pi *10,000,000.  Call it 31,540,000 seconds in a year.  That means if you sat at a window throwing out a dollar bill every second of every day, 24/7/365, you would only throw out $31.54 million dollars.  At that rate, it would take you over 31,700 years to throw out a Trillion dollars. 


  1. But the government doesn't throw out one dollar bills. They throw out the largest denominations they can have printed.

    Those figures do put things in perspective, don't they?


  2. In speaking about this bill the other day, I heard your President say that this bill will assure that the public will never be held responsible for the failures of Wall Street again. But, hold on a second Buffy, didn't the bill have several "To Big to Fail" clauses in it? If a bank or Wall Street firm is too big to fail and the Imperial Federal Government steps in to bail it out, aren't the Tax Payers on the hook for the bill? Isn't that my money they are using to bail out Wall Street? Am I not part of the "public"?

    Sounds like your President is, to use his term, is "bearing false witness" doesn't it?

  3. I find myself strangely offended by the term "your president" although he is certainly all of our president. I didn't vote for him, but I believe on various military offices around the world, pictures of GWB were taken down and replaced with pictures of BHO. The office was saluted, not the man, and work went on.

    Anyway, you're exactly right, Bob. They don't do a thing to stop bailouts of "too big to fail" and add even worse measures. If the thinks a company is a threat to the economy they may seize it or shut it down. It has been suggested that any company with big sales (Boeing? Exxon?) that they decide is a risk to the economy may be seized.

    They broke things that weren't broken, fixed things that didn't need fixing, ignored things that needed to be addressed, and - I'll bet - they made everything worse.

    I also noticed our "Liar in Chief's" use of the phrase "bearing false witness"; a term I've personally only seen used in the Bible. Clearly an attempt to manipulate people.