A national poll revealed that 64 percent of Americans understand that an ever expanding government is the biggest threat to the country. Just 26 percent believed that big business is the biggest threat. Yet investment bankers like Kolbert Kravis and Rogers are looking for bargains in Euroland. While deleveraging is the new vogue, American bankers are furthering their claims to a new economic sunrise that will hold future political sway in Europe.
Lack of regulation or an overseer to protect the investor was a primary cause of the market crash of the late 1920’s into the 1930’s. As a result, two southern Republicans devised the Glass-Steagall Act. Designed in 1932, it would shield the average investor and make clear the definition of a “bank”.
Then came the birthing of the FDIC
The advent of the FDIC was part of reforming and defining lending terms. This created regulations on the how a bank may do business versus a non-bank, its chief tenant. Banks were not allowed to place customer funds into high risk high yielding investments. Conversely investment firms were not allowed to act as banks. During the Clinton administration, the banking and investment industry was deregulated. Fast forward to now. The so-called “spicier fixed incomes” is now the term of choice when investing in risky sovereign bond markets (Southern EU).
How we have legislated or litigated ourselves out of economic turmoil speaks to how we are viewed according to world opinion.
The “one percenters” are still expanding their inequality beyond our shores taking lower income investors with them.
In the progressive monetary era, the economy was in its adolescence and the task was to control it. Today the economy is middle-aged; the task is to rejuvenate it. During the early days of progressive measures that drove the need to regulate – today we’re busy finding ways to regulate less. Our social programs and educational programs are costly with little return on taxpayer investments.
Given the state of global economic and political turmoil, are our banks taking the lead or buying policy.