I was just watching the Jeff Randall show on Sky, on the subject of new post-crisis bank regulations one of the guest suits opined that the real elephant in the room, the aspect no-one was discussing, was the Glass-Steagall Act.
This was passed after the last depression – way back – and essentially determined the investment arm of a bank received no inside info (which might have given them unfair marketplace advantage) from their commercial arm.
The act was repealed in recent years and that in all probability has a great deal to do with the economy being in the perceived mess (dead as a doornail, in my view) that it is.
Point is, the elephant referred to is there’s no suggestion offered that this act be re-instigated, nor anything similar.
Meaning, in essence, obscured behind all the huffing and puffing lies the hard-to-deny suggestion that nothing being offered will work to regulate the banks.
Further, anything that might genuinely regulate the banks isn’t even on the table.
Lots of hot air from the politicos, then, and nothing of substance behind it.
The banks go on their merry way to the casino. When they win, they award themselves huge bonuses, and when they lose again they award themselves huge bonuses and we’re asked to bail them out.
Some might feel justified in asking at this point, “Who really runs this country, the government, or the banks?”
But I digress… Glass-Steagall was the elephant in the room according to Jeff Randall’s guest suit, but I suggest that the real elephant might be, “If the banks are so broke they are having to be bailed out by the government (that’s the taxpayer, don’t forget), and to get the money to bail out the banks the government (on behalf of the taxpayer) is having to borrow money from the banks… at interest… where do the banks get the money to lend to the government to give to the banks?”
And that’s not all, because another unasked question, another elephant, might be along the lines of, “If the banks know they’ll be bailed out by the taxpayer anytime they gamble and lose, what’s to stop them gambling over and over?” and yet another might be, “If the government prints bonds and banks lend the government money on the strength of those bonds, money that the banks have created out of thin air, literally, because in law they’re allowed to do this, why doesn’t the government simply print money itself at no interest and cut out the banks who are in many ways entirely superfluous and purely parasitic?”
That’s a lot of elephants.