Root Cause of the Financial Crisis

[gonegolfin]

The following is an excellent article from Steve Saville pinpointing the root cause of the financial crisis. Not allowing free market forces (through the supply and demand for money) to determine the cost of credit results in the mis-allocation of capital (mal-investment). In our present case, a gross mis-allocation of capital that must be purged from the financial system. Yet, the choices being made by government leaders is perpetuating a problem that has been caused by precisely the same measures that are being proposed to fix the problem. Massive supplies of money and cheap credit.

Trying To Get Something for Nothing

Brian

 

[Truthmatters]

The sec has already said the reason was gramm leach bliley

 

[dilloduck]

The sec has already said the reason was gramm leach bliley

The SEC isn't God .

 

[Truthmatters]

http://www.sec.gov/news/press/2008/2008-230.htm




Chairman Cox Announces End of Consolidated Supervised Entities Program
FOR IMMEDIATE RELEASE
2008-230
Washington, D.C., Sept. 26, 2008 — Securities and Exchange Commission Chairman Christopher Cox today announced a decision by the Division of Trading and Markets to end the Consolidated Supervised Entities (CSE) program, created in 2004 as a way for global investment bank conglomerates that lack a supervisor under law to voluntarily submit to regulation. Chairman Cox also described the agency's plans for enhancing SEC oversight of the broker-dealer subsidiaries of bank holding companies regulated by the Federal Reserve, based on the recent Memorandum of Understanding (MOU) between the SEC and the Fed.

Chairman Cox made the following statement:

The last six months have made it abundantly clear that voluntary regulation does not work. When Congress passed the Gramm-Leach-Bliley Act, it created a significant regulatory gap by failing to give to the SEC or any agency the authority to regulate large investment bank holding companies, like Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns.

Because of the lack of explicit statutory authority for the Commission to require these investment bank holding companies to report their capital, maintain liquidity, or submit to leverage requirements, the Commission in 2004 created a voluntary program, the Consolidated Supervised Entities program, in an effort to fill this regulatory gap.

 

[dilloduck]

The following is an excellent article from Steve Saville pinpointing the root cause of the financial crisis. Not allowing free market forces (through the supply and demand for money) to determine the cost of credit results in the mis-allocation of capital (mal-investment). In our present case, a gross mis-allocation of capital that must be purged from the financial system. Yet, the choices being made by government leaders is perpetuating a problem that has been caused by precisely the same measures that are being proposed to fix the problem. Massive supplies of money and cheap credit.

Trying To Get Something for Nothing

Brian

Any capital provided by the government to the banks will first have to be extracted from other parts of the economy via taxation or inflation or borrowing. In other words, the government's provision of additional capital to sick businesses can only happen at the expense of the more healthy parts of the economy.

Can we nail that to Congresses forehead ?

 

[Truthmatters]

U.S. Securities and Exchange Commission - Wikipedia, the free encyclopedia


The U.S. Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets. The SEC was created by section 4 of the Securities Exchange Act of 1934 (now codified as 15 U.S.C. § 78d and commonly referred to as the 1934 Act). In addition to the 1934 Act that created it, the SEC enforces the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002 and other statutes.

 

[Valerie]

The following is an excellent article from Steve Saville pinpointing the root cause of the financial crisis. Not allowing free market forces (through the supply and demand for money) to determine the cost of credit results in the mis-allocation of capital (mal-investment). In our present case, a gross mis-allocation of capital that must be purged from the financial system. Yet, the choices being made by government leaders is perpetuating a problem that has been caused by precisely the same measures that are being proposed to fix the problem. Massive supplies of money and cheap credit.

Trying To Get Something for Nothing

Brian

Thanks!

from the article -->

The current predicament was not caused by insufficient government regulation and the risk of future disruptions will not be mitigated by increased government regulation. The mortgage market was already heavily regulated prior to the crisis, but had it been even more regulated and had the regulations severely crimped, rather than boosted, the abilities and desires of financial corporations to expand the supply of mortgage-related instruments, then the focal point of the boom would have shifted; however, bubbles would still have formed somewhere and these bubbles would subsequently have burst, leaving financial wreckage and major economic dislocations in their wake (the bust is always and everywhere a consequence of the preceding boom). The reason is that the boom was caused by the central bank fixing the price of short-term credit at an artificially low level for a prolonged period, thus encouraging trillions of dollars of investments and new business ventures that should never have seen the light of day. In effect, the central bank created an environment in which prudent lending practices were punished and reckless lending practices were rewarded.

 

[Truthmatters]

Guys the people who are tasked with dealing with these issues has said it was the GLB act of 1999 that cause this.

End of story.

 

[dilloduck]

U.S. Securities and Exchange Commission - Wikipedia, the free encyclopedia


The U.S. Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets. The SEC was created by section 4 of the Securities Exchange Act of 1934 (now codified as 15 U.S.C. § 78d and commonly referred to as the 1934 Act). In addition to the 1934 Act that created it, the SEC enforces the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002 and other statutes.

It doesn't say they are right about everything anywhere in there. This is ANOTHER example of you clinging to a piece of information that you like the best. Stop clinging, you dork.

 

[Truthmatters]

It is the determination of the people who are in charge of policing the market.

It is the Securities and exchange Commission for gods sake man.

The guy is a Bush appointee.

Its an unbiased assesment of the situation dude.

Tell me what you know about GLB 1999?

 

[Truthmatters]

Steve Saville | Our People | Fasken Martineau

This guy is who?

 

[dilloduck]

Guys the people who are tasked with dealing with these issues has said it was the GLB act of 1999 that cause this.

End of story.

Did you hear the door of your little mind slam shut ? Good. Big echo, huh ?

 

[dilloduck]

It is the determination of the people who are in charge of policing the market.

It is the Securities and exchange Commission for gods sake man.

The guy is a Bush appointee.

Its an unbiased assesment of the situation dude.

Tell me what you know about GLB 1999?

Excuse me but YOU are asking MOI to believe a Bush appointee ??

 

[Gunny]

The following is an excellent article from Steve Saville pinpointing the root cause of the financial crisis. Not allowing free market forces (through the supply and demand for money) to determine the cost of credit results in the mis-allocation of capital (mal-investment). In our present case, a gross mis-allocation of capital that must be purged from the financial system. Yet, the choices being made by government leaders is perpetuating a problem that has been caused by precisely the same measures that are being proposed to fix the problem. Massive supplies of money and cheap credit.

Trying To Get Something for Nothing

Brian

This is hard? Unscrupulous lenders combined with irresponsible borrowers. Perfect combination.

 

[dilloduck]

This is hard? Unscrupulous lenders combined with irresponsible borrowers. Perfect combination.

Greed Squared

 

[Truthmatters]

Press Release: Chairman Cox Announces End of Consolidated Supervised Entities Program; 2008-230; Sept. 26, 2008




Chairman Cox Announces End of Consolidated Supervised Entities Program
FOR IMMEDIATE RELEASE
2008-230
Washington, D.C., Sept. 26, 2008 — Securities and Exchange Commission Chairman Christopher Cox today announced a decision by the Division of Trading and Markets to end the Consolidated Supervised Entities (CSE) program, created in 2004 as a way for global investment bank conglomerates that lack a supervisor under law to voluntarily submit to regulation. Chairman Cox also described the agency's plans for enhancing SEC oversight of the broker-dealer subsidiaries of bank holding companies regulated by the Federal Reserve, based on the recent Memorandum of Understanding (MOU) between the SEC and the Fed.

Chairman Cox made the following statement:

The last six months have made it abundantly clear that voluntary regulation does not work. When Congress passed the Gramm-Leach-Bliley Act, it created a significant regulatory gap by failing to give to the SEC or any agency the authority to regulate large investment bank holding companies, like Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns.

Because of the lack of explicit statutory authority for the Commission to require these investment bank holding companies to report their capital, maintain liquidity, or submit to leverage requirements, the Commission in 2004 created a voluntary program, the Consolidated Supervised Entities program, in an effort to fill this regulatory gap.

This only the person who represents the best informed people on the issue today.

 

[dilloduck]

This only the person who represents the best informed people on the issue today.

You know. I think I'll go ahead and do some of my own research instead --ok ? I mean the guys a Bush appointee---you know they all cheat and lie and have sex with kids right ?

 

[Truthmatters]

Never said they did.

Your "own " research Im sure involves finding deregulation not the problem.

 

[Zoomie1980]

The following is an excellent article from Steve Saville pinpointing the root cause of the financial crisis. Not allowing free market forces (through the supply and demand for money) to determine the cost of credit results in the mis-allocation of capital (mal-investment). In our present case, a gross mis-allocation of capital that must be purged from the financial system. Yet, the choices being made by government leaders is perpetuating a problem that has been caused by precisely the same measures that are being proposed to fix the problem. Massive supplies of money and cheap credit.

Trying To Get Something for Nothing

Brian

The current economic crisis is essentially the last of a long line of great social gifts to the country from the Baby Boom generation.....of which I am a reluctant member....

 

[Truthmatters]

It was if Gramm Leach and Blialey are baby boomers.

I think they are all too old to be boomers though