tag:blogger.com,1999:blog-6245381193993153721.post7721307725919053295..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Financial Deregulation and Origin of the Financial Crisis of 2008Lord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-6245381193993153721.post-1951397854877287752016-05-14T17:30:28.435-07:002016-05-14T17:30:28.435-07:00Thanks, you're awesome! ;-) Idk why I don'...Thanks, you're awesome! ;-) Idk why I don't get email alerts on your replies...Kevinhttps://www.blogger.com/profile/11890229869783893118noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-49493787903297639552016-05-14T04:21:21.953-07:002016-05-14T04:21:21.953-07:00(1) Libertarian blowhard idiots know virtually not...(1) Libertarian blowhard idiots know virtually nothing about economics or economic history.<br /><br />It is not the number of regulations per se that is the issue, but whether the system of financial regulation was well designed and effective.<br /><br />The post-WWII system of quite effective financial regulation as gutted by a number of neoliberal legislative acts as follows:<br /><br />As for relative financial deregulation, the acts that did so are easy to list:<br /><br />(1) Depository Institutions Deregulation and Monetary Control Act (1980)<br /><br />(2) Garn–St. Germain Depository Institutions Act (1982)<br />These were major contributors to the Savings and Loan crisis.<br /><br />(3) Riegle-Neal Interstate Banking and Branching Efficiency Act (1994)<br /><br />(4) Financial Services Modernization Act of (1999), also called the Gramm-Leach-Bliley Act<br /><br />(5) Commodity Futures Modernization Act (2000).<br /><br />(6) The SEC’s Voluntary Regulation Regime for Investment Banks (2004)<br /><br />(2) For further analysis, see here:<br /><br />http://www.newleftreview.org/A2739<br /><br />http://newleftreview.org/?view=2715<br /><br />http://www.newleftreview.org/A2759<br /><br />A sample:<br /><br /><i>"The management of risk—especially systemic risk—in the financial world was evidently deeply flawed. An important part of the problem was that core financial institutions had used a shadowy secondary banking system to hide much of their exposure. Citigroup, Merrill Lynch, hsbc, Barclays Capital and Deutsche Bank had taken on a lot of debt and lent other people’s money against desperately poor collateral. Prior to the us deregulation and uk privatizations of the 1990s, us investment banks would have been barred by the Glass–Steagall Act of 1933 from dabbling in retail finance, and Northern Rock would have remained a solid, and very boring, building society."</i><br /><br />Robin Blackburd, "The Subprime Crisis," New Left Review 50, March-April 2008<br />http://newleftreview.org/?view=2715<br /><br />(3) Canada’s was not the source of the subprime crisis or financial crisis, it is true that Canada has had its own financial deregulation legislation causing the predictable catastrophes:<br /><br />http://prudentpress.com/finance/outward-expansion-deregulation-of-canadas-financial-industry-pt-7/<br /><br />(4) The Austrian business cycle theory is horsesh*t on virtually every level:<br /><br /><a href="http://socialdemocracy21stcentury.blogspot.com/2013/08/why-austrian-business-cycle-theory-is.html" rel="nofollow">“Why the Austrian Business Cycle Theory is Wrong (in a Nutshell),” August 3, 2013.</a><br /><br /><a href="http://socialdemocracy21stcentury.blogspot.com/2013/12/daniel-kuehn-on-austrian-business-cycle.html" rel="nofollow">“Daniel Kuehn on the Austrian Business Cycle Theory,” December 5, 2013.</a><br /><br /><a href="http://socialdemocracy21stcentury.blogspot.com/2013/02/the-natural-rate-of-interest-in-abct.html" rel="nofollow">“The Natural Rate of Interest in the ABCT: A Definition and Analysis,” February 26, 2013.</a>Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-19040394654411413842016-05-14T03:36:25.946-07:002016-05-14T03:36:25.946-07:00I posted your link to reply to someone in the comm...I posted your link to reply to someone in the comments here:<br /><br />https://youtu.be/oWItkj0X_wo<br /><br />His name is SaulOhio and this is his original comment:<br /><br />"Excessive deregulation caused the 2008 crash?Other than Glass-Steagal, what regulations were removed? That's ONE regulation removed, but I can name many more laws and regulations that were imposed. Sarbanes Oxley, Bush's American Dream Downpayment Act. The Fed engaging in all sorts of regulatory enforcement actions. Look up their web page on that subject. And most importantly, they lowered their interest rate to 1%, which is exactly what Austrian economics says will cause a bubble to inflate, resulting in a crash. Its a PERFECT, TEXTBOOK example of the Austrian theory of the business cycle in action."<br /><br />Then I posted your link, and here was his reply:<br /><br />Still weak, and nothing compared the heavy regulation by the Federal Reserve in the form of interest rate manipulation, which is what flooded the economy with the liquidity to inflate the housing bubble. And then the article mentions Canada. But Canada never, EVER had anything resembling Glass Steagal.<br /><br />If you don't want to publish this and reply here or reply to him on Youtube, you can shoot an email over to me: kevinwayne@gmail.com - Curious as to your reaction.Kevinhttps://www.blogger.com/profile/11890229869783893118noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-43987515149781623032011-08-04T07:04:04.999-07:002011-08-04T07:04:04.999-07:00http://idei.fr/doc/conf/pol/reshef_slides.pdf
thi...http://idei.fr/doc/conf/pol/reshef_slides.pdf<br /><br />this contains a slide with the same chart and the following explanation.<br /><br /><i>Financial deregulation index<br />1. Bank branching restrictions. Percent of .S. population in deregulated states; [0, 1].<br /><br />2. Separation of commercial and investment banks. Glass-Steagall Act legislated in 1933 and gradually weakened starting in 1987 until Önal repeal in 1999; [0, 1].<br /><br />3. Interest rate ceilings. Legislation introduced in 1933 and removed gradually between 1980 and 1984; [0, 1].<br /><br />4. Separation of banks from insurance companies. Legislation introduced in 1956 and repealed in 1999; [0, 1].<br /><br />Index is given by (1) (2) (3) (4); [3, 1].<br /></i>argosyjonesnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-70013650468418640402011-01-29T05:22:05.396-08:002011-01-29T05:22:05.396-08:00Anonymous,
Thanks for the graph.
It is unclear ...Anonymous, <br /><br />Thanks for the graph.<br /><br />It is unclear what the "Financial deregulation index" in the graph actually is, as it is not explained properly.<br /><br />But logic would suggest that a falling "Financial deregulation index" means <i>increased</i> financial regulation - which is what seems to be shown on the graph from 1933/34 to 1949.<br /><br />A rising "Financial deregulation index" would show increased financial deregulation - again what appears to happen 1979/1980 onwards.<br /><br />So this graph appears to support my analysis above.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-55927685686424215122011-01-29T05:10:38.719-08:002011-01-29T05:10:38.719-08:00Thanks for the response. I think I may have found ...Thanks for the response. I think I may have found evidence for increased financial deregulation here: http://www.businessinsider.com/chart-of-the-day-financial-regulation-2010-4<br /><br />It appears that financial deregulation actually started increasing in the 1980's. It also looks like deregulation was high before the Great Depression. Are you reading this graph the same way?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-56138793267317041412011-01-28T04:06:56.669-08:002011-01-28T04:06:56.669-08:00"I'm sorry but you are incorrect. Regulat...<i>"I'm sorry but you are incorrect. Regulations have been growing at incredible speed since the 1970's as shown by this graph"</i><br /><br />It is the <i>system</i> of financial regulation that matters, not the number of regulations.<br /><br />I don't deny there were many fiancial regulations after 1980 - but that doesn't change the fact that it was an <i>ineffective</i> system compared to the one the existed before about 1980.<br /><br />Anyway, your graph:<br /><br />http://www.gold-speculator.com/casey-research/8124-charts-ten-thousand-commandments.html<br /><br />seems to show <i>total</i> government regulations anyway, not fiancial regulations.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-14804835671420941232011-01-28T03:47:08.859-08:002011-01-28T03:47:08.859-08:00I'm sorry but you are incorrect. Regulations h...I'm sorry but you are incorrect. Regulations have been growing at incredible speed since the 1970's as shown by this graph: http://www.gold-speculator.com/casey-research/8124-charts-ten-thousand-commandments.html <br /><br />This pretty much debunks all your ideas.Anonymousnoreply@blogger.com