The Glories of Right and Wrong

The Glass-Steagall Act separated commercial and investment banking, the Gramm-Leach-Bliley Act removed those Restrictions. Glass-Steagall was passed in 1933, Banks were forbidden to underwrite Insurance in 1956, and Gramm-Leach-Bliley was passed in 1999. The first failure in commercial banking occurred almost immediately (may actually have started prior to passage), and the real failure to investment banking started in early 2008. Henry Kaufman claims the Fed has been captured by Libertarian principle–which I doubt, but I do most sincerely believe "the Fed played a central role in creating a financial environment defined by excessive credit growth and unrestrained profit seeking. . ." Congress did remove the Cutout mechanism to separate commercial banking and Investment, and poor credit ratings could no longer forestall the search for Profits.

The current federal plan to save at-risk Companies is to bankrupt Bondholders. We are talking about $62 trillion, and the best Government counteroffer I have seen is payment of 71% of the face value. Considering that the CDSs were only allowed since 1999, We are talking about a Interest rate around a negative 3% for the duration of these Instruments. I could suggest that the fed seek to reinstate the Glass-Steagall provisions, as the CDSs will never bring in the Cash that they had previously, and guarantees on sounder forms of Debt might need to be made, before Cash is even acquired in these safer venues. The whole argument bores me, but I keep on, as I believe that the Fed will turn this into the Second Great Depression if they do not get a grip, and start allowing Bankruptcies.

I will leave the Reader with Videos from Mish, which I myself have not reviewed; a while back, I worked on my computer, and failed to reinstate my loudspeakers. I founds Comfort in ignoring the Words of Man, and later Contentment at listening to Music. I will eventually have to reignite my loudspeakers, though I keep putting it off. The Cares of the World can be so much simpler, if one ignores the groans of the World. These Videos may be of some interest to the Reader, because they purportedly document the destruction of new houses, rather than going to the expense of maintaining them to Code. It is a fact that bare land can be resold, loans made against new Construction, and renewed mortgages issued; all possibly easier than trying to get a decayed home sold. A waste of Capital and Resource, but Depositors are being stuck with all the residual Costs. lgl