Fed Issues New Rules
|
|
The Federal Reserve issued new rules for mortgage finance.
Both the new rules and criticsim of the new rules do not include what caused the mortgage crisis with the overproduction of housing.
The first thing to be analytically recognized as problematic is allowing the financial sector to horizontally and vertically integrate. Despite the warnings of political economists at the time, the result was as predicted, described here by the AP today:
"In an extraordinary action aimed at averting a financial catastrophe, the Fed in March agreed to let investment houses go to the Fed - on a temporary basis - for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.
'We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets,' Bernanke said in prepared remarks to a mortgage-lending forum in Arlington, Va.
The Fed's decision to act - temporarily at least - as a lender of last resort for Wall Street firms was made after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that others might be in jeopardy. It was the broadest use of the Fed's lending powers since the 1930s.
Bear Stearns was eventually taken over by JPMorgan Chase & Co. (JPM), with the Fed providing $28.82 billion in financial backing.
Those controversial decisions have drawn criticism from Democrats in Congress and elsewhere that the Fed is bailing out Wall Street and putting billions of taxpayer dollars at risk.
Bernanke, in appearances on Capitol Hill has said he doesn't believe taxpayers will suffer any losses.
In his speech Tuesday, the Fed chief defended those actions anew. 'If the Fed didn't intervene,' he said, 'problems in financial markets would have snowballed, imperiling the country.' (WASHINGTON, AP, Jul 8, 9:23 PM ET,
By JEANNINE AVERSA).
Allowing the financial sector to integrate did not increase a competitive multiplicity of the marketplace (pluralism). It allowed for capital markets to consolidate, and the result was the same that happened in the 1930s, as predicted.
The invention of monetarism is the only difference now. The FDIC prevents our nation from being pushed to the brink of the only two elitist models of power offered to control the crisis in the 1930s--fascism or socialism by admission of the power elite at the time.
Which allowable choice prevailed? It certainly was not free market economics (pluralism) because we again are experiencing "problems in financial markets [that] would have snowballed, imperiling the country."
Free market economics is clearly in order by virtually every technical indicator.
What do you say we try that for a while!
Obama 2008!
Very best wishes.
Both the new rules and criticsim of the new rules do not include what caused the mortgage crisis with the overproduction of housing.
The first thing to be analytically recognized as problematic is allowing the financial sector to horizontally and vertically integrate. Despite the warnings of political economists at the time, the result was as predicted, described here by the AP today:
"In an extraordinary action aimed at averting a financial catastrophe, the Fed in March agreed to let investment houses go to the Fed - on a temporary basis - for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.
'We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets,' Bernanke said in prepared remarks to a mortgage-lending forum in Arlington, Va.
The Fed's decision to act - temporarily at least - as a lender of last resort for Wall Street firms was made after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that others might be in jeopardy. It was the broadest use of the Fed's lending powers since the 1930s.
Bear Stearns was eventually taken over by JPMorgan Chase & Co. (JPM), with the Fed providing $28.82 billion in financial backing.
Those controversial decisions have drawn criticism from Democrats in Congress and elsewhere that the Fed is bailing out Wall Street and putting billions of taxpayer dollars at risk.
Bernanke, in appearances on Capitol Hill has said he doesn't believe taxpayers will suffer any losses.
In his speech Tuesday, the Fed chief defended those actions anew. 'If the Fed didn't intervene,' he said, 'problems in financial markets would have snowballed, imperiling the country.' (WASHINGTON, AP, Jul 8, 9:23 PM ET,
By JEANNINE AVERSA).
Allowing the financial sector to integrate did not increase a competitive multiplicity of the marketplace (pluralism). It allowed for capital markets to consolidate, and the result was the same that happened in the 1930s, as predicted.
The invention of monetarism is the only difference now. The FDIC prevents our nation from being pushed to the brink of the only two elitist models of power offered to control the crisis in the 1930s--fascism or socialism by admission of the power elite at the time.
Which allowable choice prevailed? It certainly was not free market economics (pluralism) because we again are experiencing "problems in financial markets [that] would have snowballed, imperiling the country."
Free market economics is clearly in order by virtually every technical indicator.
What do you say we try that for a while!
Obama 2008!
Very best wishes.
Yes, it will take an act of congress to change the rules.
Thank you.
Very best wishes.
Protectionism loses value as full employment and low inflation of free markets strengthens the value of the currency. Free trade happens for a free market economy without macro negotiation like with consolidated capital--the source of the exploitation of labor value we are experiencing.
Thank you for the appreciation.
Very best wishes.