We should all agree with this!

[Dad2three]

West Germany is doing pretty well. Semi socialist and investing in clean energy. Unions, National health care and all. I'll stop so you can get some garlic and a holy cross, maybe a wooden stake and a mallet too.

West Germany doesn't exist in this world, where do you live?

WHy do you need facts when you have narrative?
The truth is that Germany has lagged the US in growth for years, until Obama came in and made anemic Euro growth look like a powerhouse by comparison.

DON'T let FACTS get in your way, they usually don't

What Germany Inc. Can Teach America About Economics


The German unemployment rate has remained consistently one of the developed world’s lowest and, at last count, on an American accounting basis, stood at a mere 5.5 percent. This was the second lowest of ten advanced nations surveyed by the U.S. Bureau of Labor Statistics and compares with 7.6 percent for the United States


...Perhaps even more impressive is Germany’s international competitiveness. As of 2012, Germany ran a balance of payments surplus of $208 billion – the second highest in the world after China’s $214 billion. On a per-capita basis, Germany’s surplus was more than 16 times China’s.

Another telling statistic is Germany’s net foreign assets. At $1,437 billion recently, they rank among the world’s largest. By comparison America’s foreign assets have long since been exceeded by its liabilities, and its net foreign liabilities at last count were a shocking $4,277 billion.



As for per-capita incomes, Germans have seen growth of 49.2 percent as measured in current dollars in the most recent ten years – easily trumping growth of just 27.7 percent in the United States.



The most interesting thing about all this is that Germany does not believe in American-style free markets, and never has. The German labor market, for instance, is extensively regulated to discourage layoffs and in downturns German corporations are generally obligated to carry more labor than they can fully use. Even so such huge German employers as Daimler have remained profitable in the last few years.

Another sharp deviation from American ideas of good economics is in anti-trust regulation. Although cartels are officially illegal in Germany, they are generally tolerated if not actively encouraged, with the result that it is almost impossible for new entrants to penetrate many areas of German industry.



Given its flouting of so much of the canon of “good economics,” why has Germany been so successful? The short answer is that free markets are greatly exaggerated as a source of economic success (they come up short in safeguarding a nation’s endowment of advanced production technology, for instance).

A longer answer would point out that Germany’s economic structuring closely parallels that of the miracle economies of East Asia and can be presumed to be designed to achieve the same objectives. Indeed for those who know their economic history, it is East Asia that has copied German economic ideas, not the other way around. The story goes all the way back to the 1870s and 1880s when Bismarck set Germany on the road to economic superpowerdom with a strongly mercantilist approach to trade.



Mein Gott! What Germany Inc. Can Teach America About Economics - Forbes

 

[EdwardBaiamonte]

Bismarck set Germany on the road to economic superpowerdom with a strongly mercantilist approach to trade.

and would dumbto3 advocate that we adopt mercantilism today over capitalism and free trade? Why?

 

[Sunni Man]

The jews own and run the Federal Reserve.

So the American goyim will continue to get fleeced by the banks.

And our nation will never get out of debt. ..

The US has had a debt since George Washington...

MoonGoon the Federal Reserve did start until 1913 ...

 

[EdwardBaiamonte]

The jews own and run the Federal Reserve.

what has the fed done with which you disagree? do you feel non jew presidents were forced to appoint jews to FEd??

 

[Toddsterpatriot]

Warren, McCain: Rein in 'too big to fail' banks - CNN.com

"The big Wall Street banks continue to hum along as they did before the crisis -- too big to fail and, in many cases, potentially exposing the economy to the risk of systemic failure"

..."five years after the crash, the big banks are more concentrated and more interconnected and their appetite for excessively risky behavior is unchanged. The biggest banks are substantially bigger than they were in 2008. In fact, the five biggest banks now control more than half the nation's total banking assets."

"That's why we co-sponsored the 21st Century Glass-Steagall Act. The Act, which we first introduced a year ago last week, would separate traditional banks that offer checking and savings accounts from riskier financial services, such as investment banking and swaps dealing."

See link for full article. Poll to follow.

Glass Steagall didn't prevent banks from writing bad mortgages.
Why do we need to bring it back?

 

[The Rabbi]

When it was not regulated financial panics, depressions and recessions were still happening in the USA..

And when they were regulated they were still happening. So how effective is regulation at preventing any of that?

 

[Nemo]

What is needed is to reimpose the restrictions of Glass-Steagall on proprietary trading by banks and their affiliates that were repealed by the Gramm-Leach-Bliley Act. The problem was the unregulated wholesale marketing of subprime mortgages as debt securities. Allowing banks to deal in these high-risk, secret transactions is against all rules of bank accountability. There has to be a clear dividing line between banking that is insured, and market trading that is not (e.g., Great American Bank vs. Great American, Inc.). Banks should be in the business of lending money and providing financial services, not speculating on the stock market.

 

[The Rabbi]

What is needed is to reimpose the restrictions of Glass-Steagall on proprietary trading by banks and their affiliates that were repealed by the Gramm-Leach-Bliley Act. The problem was the unregulated wholesale marketing of subprime mortgages as debt securities. Allowing banks to deal in these high-risk, secret transactions is against all rules of bank accountability. There has to be a clear dividing line between banking that is insured, and market trading that is not (e.g., Great American Bank vs. Great American, Inc.). Banks should be in the business of lending money and providing financial services, not speculating on the stock market.

Glass Steagall would have done nothing to prevent the meltdown, just as it did nothing to prevent the S&L crisis, the Latin American debt crisis and various other banking problems that occurred.
There should be no line between insured banking and not, because there should be no insurance provided by the government for deposits. They amount to a de facto subsidy of banks and encourage bad behavior.

 

[Nemo]

Glass-Steagall would have prevented the sale of mortgage-backed securities that were tranched and traded subject to repurchase agreements. This was the precipitating cause of the market collapse, and the bank failures of 2008.

The only way for banking to be self-regulatory is get rid of the bankruptcy exemption for financial derivative contracts. The problem with regulating banking and the financial markets can be easily solved with a single piece of legislation. Congress should repeal the safe-harbor provisions of title 11 that exempt financial derivative contracts from bankruptcy. (Derivatives are really secret liens that conceal leveraged borrowing carried “off balance sheet” - this was the lesson learned from the Lehman Brothers bankruptcy, and why AIG was “too big to fail” necessitating the government “bail-out.”) Without that exemption for “anonymous creditors” the counterparties to these derivative contracts will be forced to disclose their liens to preserve the priority of their secured interests. Elimination of these safe-harbor provisions will provide more transparency and promote more emphasis on value over high-risk speculation.

 

[The Rabbi]

Glass-Steagall would have prevented the sale of mortgage-backed securities that were tranched and traded subject to repurchase agreements. This was the precipitating cause of the market collapse, and the bank failures of 2008.

The only way for banking to be self-regulatory is get rid of the bankruptcy exemption for financial derivative contracts. The problem with regulating banking and the financial markets can be easily solved with a single piece of legislation. Congress should repeal the safe-harbor provisions of title 11 that exempt financial derivative contracts from bankruptcy. (Derivatives are really secret liens that conceal leveraged borrowing carried “off balance sheet” - this was the lesson learned from the Lehman Brothers bankruptcy, and why AIG was “too big to fail” necessitating the government “bail-out.”) Without that exemption for “anonymous creditors” the counterparties to these derivative contracts will be forced to disclose their liens to preserve the priority of their secured interests. Elimination of these safe-harbor provisions will provide more transparency and promote more emphasis on value over high-risk speculation.

So Glass steagall outlawed mortgage backed securities? Wow, who knew?

 

[Nemo]

Glass-Steagall restricted proprietary trading by bank entities and transactions with financial affiliates.

 

[The Rabbi]

Glass-Steagall restricted proprietary trading by bank entities and transactions with financial affiliates.

It set up a wall betweein banking functions and brokerage functions. IT wasn't necessary when it was passed and it became more irrelevant as time went on. It didnt prevent any previous financial crises nor would it have prevented this one. It did artificially suppress earnings and increase inefficiency in the economy.

 

[Toddsterpatriot]

What is needed is to reimpose the restrictions of Glass-Steagall on proprietary trading by banks and their affiliates that were repealed by the Gramm-Leach-Bliley Act. The problem was the unregulated wholesale marketing of subprime mortgages as debt securities. Allowing banks to deal in these high-risk, secret transactions is against all rules of bank accountability. There has to be a clear dividing line between banking that is insured, and market trading that is not (e.g., Great American Bank vs. Great American, Inc.). Banks should be in the business of lending money and providing financial services, not speculating on the stock market.

What is needed is to reimpose the restrictions of Glass-Steagall on proprietary trading by banks and their affiliates that were repealed by the Gramm-Leach-Bliley Act.

I can't think of a single bank that got in trouble because of proprietary trading.
Glass-Steagall would have prevented JPMorgan from buying Bear Stearns and Bank of America from buying Merrill.

That would have made things worse. So why bring it back?

 

[Toddsterpatriot]

Glass-Steagall would have prevented the sale of mortgage-backed securities that were tranched and traded subject to repurchase agreements. This was the precipitating cause of the market collapse, and the bank failures of 2008.

The only way for banking to be self-regulatory is get rid of the bankruptcy exemption for financial derivative contracts. The problem with regulating banking and the financial markets can be easily solved with a single piece of legislation. Congress should repeal the safe-harbor provisions of title 11 that exempt financial derivative contracts from bankruptcy. (Derivatives are really secret liens that conceal leveraged borrowing carried “off balance sheet” - this was the lesson learned from the Lehman Brothers bankruptcy, and why AIG was “too big to fail” necessitating the government “bail-out.”) Without that exemption for “anonymous creditors” the counterparties to these derivative contracts will be forced to disclose their liens to preserve the priority of their secured interests. Elimination of these safe-harbor provisions will provide more transparency and promote more emphasis on value over high-risk speculation.

Glass-Steagall would have prevented the sale of mortgage-backed securities that were tranched and traded subject to repurchase agreements.

Why do you feel that? MBS were available before 1999.

This was the precipitating cause of the market collapse, and the bank failures of 2008.

Nothing in GS prevented banks from writing bad mortgages.

Congress should repeal the safe-harbor provisions of title 11 that exempt financial derivative contracts from bankruptcy.

Derivatives should be cleared on an exchange.

 

[Nemo]

In December 2007, I attended a dinner party hosted by Bank of America (BofA) to promote the bank’s renewed partnership with Epiq Systems providing management and automated accounting programs for fiduciary accounts. At the party, I had the opportunity to speak at some length with (then) CEO Ken Lewis about the bank’s proposed acquisition of Countrywide Financial, which had not yet been announced to the public. (At that time, BofA was heavily into fiduciary banking services that required a very high cash collateralization; and there was concern that the Countrywide deal would create an "impairment of capital" situation for the bank due to the large portfolio of at risk loans subject to "repurchase agreements" for securitized mortgages that had been traded on the financial markets.) Lewis was all for the deal (the bank was acquiring Countrywide at a "fire sale" price and the bank already had a substantial equity position); however this was questionable considering just the loses already posted by Countrywide that would have to be absorbed. And, as it turned out, the acquisition of Countrywide was a big mistake resulting in huge losses in settlements with state and the federal government agencies. As a consequence, BofA was forced to downsize, closing hundreds of branches, cutting thousands of jobs and eliminating many departments, including fiduciary banking services that terminated in October 2012. That is what happens when there is a lapse in regulatory oversight of banking entities.

 

[Toddsterpatriot]

In December 2007, I attended a dinner party hosted by Bank of America (BofA) to promote the bank’s renewed partnership with Epiq Systems providing management and automated accounting programs for fiduciary accounts. At the party, I had the opportunity to speak at some length with (then) CEO Ken Lewis about the bank’s proposed acquisition of Countrywide Financial, which had not yet been announced to the public. (At that time, BofA was heavily into fiduciary banking services that required a very high cash collateralization; and there was concern that the Countrywide deal would create an "impairment of capital" situation for the bank due to the large portfolio of at risk loans subject to "repurchase agreements" for securitized mortgages that had been traded on the financial markets.) Lewis was all for the deal (the bank was acquiring Countrywide at a "fire sale" price and the bank already had a substantial equity position); however this was questionable considering just the loses already posted by Countrywide that would have to be absorbed. And, as it turned out, the acquisition of Countrywide was a big mistake resulting in huge losses in settlements with state and the federal government agencies. As a consequence, BofA was forced to downsize, closing hundreds of branches, cutting thousands of jobs and eliminating many departments, including fiduciary banking services that terminated in October 2012. That is what happens when there is a lapse in regulatory oversight of banking entities.

The Fed and Treasury begged Bank of America to buy Countrywide.
Based on their actions against BofA since the purchase, no company will ever make such a deal in a future crisis.

 

[Nemo]

What is needed is to set in place regulatory authority and restrictions that will avoid a future banking crisis. That is the raison d'être of the proposed reenactment of the provisions of Glass-Steagall.

 

[Toddsterpatriot]

What is needed is to set in place regulatory authority and restrictions that will avoid a future banking crisis. That is the raison d'être of the proposed reenactment of the provisions of Glass-Steagall.

Yes. We need to further empower regulators who can't back up their email.
Regulators who push banks to lend to poor risks.

 

[EdwardBaiamonte]

What is needed is to set in place regulatory authority and restrictions that will avoid a future banking crisis. That is the raison d'être of the proposed reenactment of the provisions of Glass-Steagall.

Yes. We need to further empower regulators who can't back up their email.
Regulators who push banks to lend to poor risks.

1) Glass Steagall had nothing to do with housing crisis issues so would not have helped.

2) yes more regulatoty authority!! THere are plenty of regulators looking for work from the USSR and Red China and our own VA and Fanny Freddie!!

3) a liberal lacks the IQ to understand how capitalism works so prefers magical regulation

Warren Buffett: "There are significant limits to what regulation can accomplish. As a dramatic illustration, take two of the biggest accounting disasters in the past ten years: Freddie Mac and Fannie Mae. We're talking billions and billions of dollars of misstatements at both places".

Now, these are two incredibly important institutions. I mean, they accounted for over 40% of the mortgage flow a few years back. Right now I think they're up to 70%. They're quasi-governmental in nature. So the government set up an organization called OFHEO. I'm not sure what all the letters stand for. [Note to Warren: They stand for Office of Federal Housing Enterprise Oversight.] But if you go to OFHEO's website, you'll find that its purpose was to just watch over these two companies. OFHEO had 200 employees. Their job was simply to look at two companies and say, "Are these guys behaving like they're supposed to?" And of course what happened were two of the greatest accounting misstatements in history while these 200 people had their jobs. It's incredible. I mean, two for two!

“Whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets,” he said. “Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime.”-Alan Greenspan

 

[Nemo]

No one pushed the banks to make bad loans. The banks lobbied Congress to repeal the restriction of Glass-Steagall on proprietary trading, and the government failed to exercise proper regulatory oversight of the sale of mortgage-backed securities. Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages. Once the restrictions on trading were repealed, the warehouse loans were replaced repurchase agreements in which the mortgage-backed securities were sold to the repo counterparty with the bank putting up cash collateral. When the mortgages starting going into default in 2006, this triggered the repo contracts that required the banks to buy back the nonperforming mortgages, leaving the banks with insufficient capital to meet obligations. Ironically, the purpose of the repurchase agreements was to provide liquidity and avoid risk of systemic failure; however it did not work in 2008 because in the hands of the bank a nonperforming mortgage is an illiquid asset. In this regard, there is nothing wrong with subprime loans per se. Virtually every VA and FHA loan is subprime. The same is true with commercial loans guaranteed by the SBA. These loans are not a problem provided that they are made with proper due diligence for collateralization and retained and serviced in house by the bank. The problem was the unregulated wholesale marketing of them as debt securities.