Greenspan Favors Nationalization And A Few Remarks On The Frontline Documentary
I'm not sure it matters what Greenspan believes at this point unless he has had an epiphany. Given his ideology is so deeply ingrained, I am dubious of any motives for making such statements. Are they pure or tainted by the large consulting contracts he is benefiting from with financial firms? That said, our position has been consistently clear - these mega institutions represent systemic risk and should be permanently removed from the economy. How its done is really irrelevant to me. Let those qualified make the decision. But let's look at a simple fact - 93% of the TARP money has gone to two dozen failing banks. The trillions of dollars being bandied about for more bailouts involves those same banks.
When we have twenty thousand lending institutions in the U.S., why do we care if there are all of a sudden nineteen-thousand nine-hundred? These banks should be removed at shareholder and debtholder's expense. From my perspective nationalization is a perfectly fine way to start the process. Over time those that are too unhealthy to be broken up and sold into healthy pieces are dismantled. I believe the major desire to pump all of this money into two dozen banks is two fold. One, lobbyists from these firms have deep pockets with our politician's best interests at heart. And, two because our current bank operating model relies on large institutions. In other words the system is trying to save itself regardless of the cost to society or what is best for society.
In closing, the Frontline story last night was rather disappointing in its scope. But, one thing I kept thinking while watching it was how many unregulated hedge funds and Wall Street bank trading desks, especially unregulated investment banks, had naked credit default swaps open against many troubled financial firms. (Re the remarks in The Great Scam post.) While any failed firms were indeed insolvent, so are banks that still exist today. Possibly banks that created the run on these failed firms through rumor mongering. The reality is these failures were caused by electronic runs on the bank caused by rumors. Rumors possibly planted by major financial firms or hedge funds that had naked bets made that these firms could be toppled. If that is true, criminals in the financial industry have purposefully attempted to destroy our banking system while financially benefiting from society in the process. And, possibly even received TARP money to continue the practice. Now, no one knows exactly what happened. But, the potential for this type of behavior is in place under the current structure. We have already seen firms benefit from naked bets against other financial firms. This is why it is so important that oversight be restored.
So, how might we know if there is any validity to this possibility? The trading books of hedge funds, banks and financial firms should be investigated by the FBI and appropriate financial regulatory arms of the government. Will that actually happen? Quite likely only if you demand it.
When we have twenty thousand lending institutions in the U.S., why do we care if there are all of a sudden nineteen-thousand nine-hundred? These banks should be removed at shareholder and debtholder's expense. From my perspective nationalization is a perfectly fine way to start the process. Over time those that are too unhealthy to be broken up and sold into healthy pieces are dismantled. I believe the major desire to pump all of this money into two dozen banks is two fold. One, lobbyists from these firms have deep pockets with our politician's best interests at heart. And, two because our current bank operating model relies on large institutions. In other words the system is trying to save itself regardless of the cost to society or what is best for society.
In closing, the Frontline story last night was rather disappointing in its scope. But, one thing I kept thinking while watching it was how many unregulated hedge funds and Wall Street bank trading desks, especially unregulated investment banks, had naked credit default swaps open against many troubled financial firms. (Re the remarks in The Great Scam post.) While any failed firms were indeed insolvent, so are banks that still exist today. Possibly banks that created the run on these failed firms through rumor mongering. The reality is these failures were caused by electronic runs on the bank caused by rumors. Rumors possibly planted by major financial firms or hedge funds that had naked bets made that these firms could be toppled. If that is true, criminals in the financial industry have purposefully attempted to destroy our banking system while financially benefiting from society in the process. And, possibly even received TARP money to continue the practice. Now, no one knows exactly what happened. But, the potential for this type of behavior is in place under the current structure. We have already seen firms benefit from naked bets against other financial firms. This is why it is so important that oversight be restored.
So, how might we know if there is any validity to this possibility? The trading books of hedge funds, banks and financial firms should be investigated by the FBI and appropriate financial regulatory arms of the government. Will that actually happen? Quite likely only if you demand it.
<< Home