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Familiar territory

By Owen Paine on Monday June 22, 2009 02:37 PM

Brer Rabbit in the briar patch, by Matt Schwartz, http://meswartz.blogspot.com/2007/09/compare-and-contrast-brer-rabbit.html

Time to give Mike Hudson, numbers man from La Mancha, his due. From a recent Counterpunch item:

"In reaching across the aisle for Republican support – and no doubt future campaign contributions from the financial sector -- Pres. Obama is morphing into Joe Lieberman.... Confronting the wreckage of a debt crisis worse than any since the Great Depression, Mr. Obama has achieved what no Republican could have: rescuing the Bush Administration’s pro-creditor policies that fostered the Bubble Economy in the first place."
A corking good start, that. Okay, so it's a long long trail ahead, but there's these twinklers:
"The deregulation-by-centralization ploy -- The politically astute way to deregulate a public utility – especially in the wake of a financial crisis that has much of the population up in arms – is to shed crocodile tears over Wall Street’s “culture of irresponsibility,” as Mr. Obama did on Wednesday, and then claim that you are “centralizing” regulation to make it stronger rather than weaker. If you are going to block future bank regulation, of course you promise that your act will provide greater public oversight. Mr. Obama has tapped the Federal Reserve for this role. But this is precisely what exacerbated the Greenspan Bubble."

"One way to make credit-card rates more economic would be for the government to provide its own rival service. After all, credit cards have become a major form of payment today. Isn’t electronic payment really a public utility? The difference is that unlike electric and gas utilities or railroads, there is no regulation to keep fees in line with economically necessary basic costs to the card issuer.... To really protect consumers, why not counter extortionate credit-card practices by re-introducing anti-usury laws? They were evaded initially by companies incorporating themselves in states with “race to the bottom” laws. If Washington can override state prosecutors to prevent punishment of financial fraud, why can’t it override such ploys by the usury industry? Here’s where centralized federal law really should count for something."

"The plan is silent when it comes to the reported 25 per cent of U.S. real estate sunk into a state of negative equity and 1/8 already in arrears heading for foreclosure as the mortgage debt attached to it exceeds its (falling) market price."

A few quibbles and boos. Hudson's indictment has six counts:
  1. Regulatory capture. Preparing the ground for future Alan Greenspan “free market” ideologues
  2. Failure to give meaningful teeth to fraud reduction
  3. Failure to reverse the shift to pro-creditor bankruptcy laws
  4. Failure to re-introduce Glass Steagall or otherwise limit lenders “too big to fail”
  5. Failure to deter credit default swaps and other “casino capitalist” gambles
  6. Failure to reform the tax system that has distorted the financial system to promote predatory extractive debt, not productive industrial credit
The last four are largely fragrant crackerbarrel airballs worthy of Bill Bryan or Andy Jackson: small is beautiful, simple is better, using too much of other people's money is a hazard, debt is heavy and default is human -- so Uncle oughta legislate accordingly -- a return to Santa's village?

Here's Mike's summary verdict on Ob's draconian crackdown:

"Mr. Obama explained: “we are proposing a set of reforms to require regulators to look not only at the safety and soundness of individual institutions, but also – for the first time – at the stability of the system as a whole.” But this is just what is not being done."
And as to the bankstas' reaction (errr -- in camera) to the prospect that maybe all this high flown proposin' might just turn out to happen? Mike quips nicely:
“Born and bred in the briar patch,” crowed B’rer Rabbit triumphantly after being thrown there.
Amen, B'rer Hudson.

Comments (7)



that's a "fight back" pwog agit prop outfit

and their response to ob's proposal:



soft serve stuff to say the least:

"To ..(ob's)..proposal, Congress must add strong measures to ensure the Federal Reserve is truly independent and responsive to the public. We must open up and democratize the Federal Reserve so that it is publicly accountable."


"...President Obama has taken an important first step toward restoring integrity and fairness to our financial system, but the battle for reform has only just begun "

double yup


You dont give enough credit to Hudson's
"last four" points, which are not airballs, particularly Glass Steagal. Along with bringing debt to equity ratios back to 11 to one, keeping banks and credit card companies separate and limiting banks to making money by lending, are major reform issues. It's not clear to me that Hudson is avoiding them in this article.

Obama -- son of Bill -- would be shocked if they were mentioned in his presence,


Glass Steagal repeal important ??
yes but only as symptom

GS all along was a paper tiger
waiting to be balled up and tossed away
as was proved by its larry ziffle led
why then ??
it was no longer convenient
note no longer convenient
for those outfits in its harness
ie the old line banks of both kinds

key point
the activity these outfits wanted in on
was already roaring along thru other operations and outfits
hence the even more important point
the paper tiger couldn't prevent
the re-emergence in another institutional guise
of the pathological process it was designed to prohibit
by its sage seperation
of banks'commercial and investment functions

leverage regs
as in
"bringing debt to equity ratios back to
11 to one"

fatter equity layers ????

a panacea without a desease

the safety of borrowed funds ??
why not total equity by law
like ending fractional reserves ???

leverage is the gearing of the surplus system
it is essential it will find a way to emerge

"keeping banks and credit card companies separate and limiting banks to making money by lending"

even if accomplished
i see no crisis prevention in this measure

sure i'd like to see the entire payments system
seperated and utility-ized
but for now that's purely artistic folly
no substantial aspect
of the private hi fi system's motions would alter


"leverage is the gearing of the surplus system
it is essential it will find a way to emerge."

OK, if you're going to get all analytical and systemic with me. . .

But, OP, gradualist on health-care; all-or-nothing on banking and credit?


Now, I want to come thunderin' back with righteous defense of the toupee'd wonder's stirring demolition of the Obama-fronted neoliberal financial warranty recall, but I am taken back a few steps from my populist outrage. Whatever your beef was with "Johnny One-Note," you are right that he (all the good folks I listen to) is/are guilty of more "high-flown proposin'." Every commentary seemed to invoke some "good/bad/ugly" to assess this big recall proposal, but help me out with the outrage here: why should there be one credible piece of "hope" that this flimflammery is being guided by people to respond to the written rational word? Is Elizabeth Warren going to mount the stake for us? Will I complain to the new Consumers Board if I think the government is paralyzing my brain waves with XE-concocted brain wave technology? Is all we are saying, what the hell? How come this "greatest financial disaster since the Great Depression" is just lost jobs, new companies, and useless bureaucratic reorganizing of the letterheads?


"gradualist on health-care; all-or-nothing on banking and credit?"
note the difference
i contend the spontaneous dynamic of pub op is => sdingle payer
the spontaneous dynamic of these regs => back on themselves
which is not to say they aren't a project to learn from
and while the hi fi -ers
are winning back our confidence .....

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