Skip to main content

The administration is seeking additional power to seize firms involved in the financial problems. Which is fine -- so long as their plan for dealing with these firms doesn't encourage more mergers and buyouts like JP Morgan / Bear Stearns or Whoever / Wachovia. Because, despite the Bush administration defending these mergers as "necessary to preserve the free market," they're neither necessary nor "free."

In fact, the last round of buyouts came with with special breaks instituted by then Treasury Secretary Hank Paulson, who rescinded a 1986 rule and provided an estimated $140 billion in tax breaks to grease the skids for mergers. In some cases, the government did more than make it easier for financial institutions to merge. In some cases it played Shadchan for reluctant partners, in others (as with Wachovia) it drove institutions to marry at the point of a fiscal shotgun. So banks that were too big to fail became bigger financial institutions that (like Citigroup) required billions more to keep afloat.

Let's wind back the clock a bit. Remember Smith-Barney, the brokerage that used the slogan "we make money the old fashioned way -- we earn it?" (you can bet no one on Wall Street is using that motto today) In the 1980s, Smith-Barney was already part of an insurance/brokerage mash-up called Primerica. Then Primerica was bought by Commercial Credit, which merged with Travelers Insurance, which bought the brokerage firm Solomon Brothers, which merged with Citicorp to form Citigroup. Fun fact: this was all pre-1999, when the Glass-Stegall Act was still in full effect, meaning that several of these mergers were probably illegal. But instead of enforcing the existing law, Congress chose to pass Gramm-Leach-Bliley, pasting a retroactive smiley face over these mergers and clearing the way for more in the future.

So instead of several smaller companies, we ended up with one behemoth which has collected $45 billion in bailout bucks, in addition to billions more in tax breaks -- $10 million of which is going to spruce up executive's offices.  But why should we be surprised by that, or by the bonuses handed out in AIG? When we gripe about these companies that have become "too big to fail," what we really mean is that they have become too big to be dictated to. They have been provided with such fiscal leverage, such control of the system, that they are too big for the United States government to control.

This is a problem whose coming was welcomed by many conservatives, who have long lived in a Rand-ian dream world where business size is equated to moral worth -- and feared by everyone else at least as far back as Teddy Roosevelt.

Theodore Roosevelt actually liked big business. He thought that the growth of big business was very healthy, that most of the businesses got there because they were efficient and the businessmen were doing their jobs right. But two things bothered him. ... One was just that idea that they were overshadowing the government, that some of these tycoons, such as J. P. Morgan, could presume that they were sovereign equals of the U.S. government.

For example, when the first big anti-trust suit under Roosevelt was brought, which was against Morgan's railroad combine, Morgan said, "Send your man to see my man and tell him to fix it up." Roosevelt's answer to that was, "That can not be done. Nobody treats as a sovereign equal to -- of the President. No company can presume to be -- no private interest can presume to be equal to the government. The government must be superior to all of these."

Market fundamentalists may cheer at the idea of government being bossed about by business forces, since they've long held disdain for government and awe of the most ruthless business mogols. They'll defend elevating business above government as "freedom" while ignoring the fact that it's enormously undemocratic. If we get anything out of living through the Great Bushwhack, let's hope it's a new understanding that the market fundamentalists are simply anti-American nuts.

From its beginning, the "American compromise" has represented an understanding that business be regulated by government for the betterment of both the market and the people. Teddy didn't mince words when it came to restating this as a central, and often neglected, role of the government.

Of course there are many sincere men who now believe in unrestricted individualism in business, just as there were formerly many sincere men who believed in slavery -- that is, in the unrestricted right of an individual to own another individual. ... The proposal to make the National Government supreme over, and therefore to give it complete control over, the railroads and other instruments of interstate commerce is merely a proposal to carry out to the letter one of the prime purposes, if not the prime purpose, for which the Constitution was founded.

When it comes to "too big to fail," the solution now as the same as it was a century ago: chop them up. That means not waiting until a company has an effective monopoly on the market before applying anti-trust laws. It means applying those laws when a company reaches the size where it deforms the market, bullies its competitors, and when the prospect of its failure is so frightening that we cushion its fall with billions in taxpayer assistance. It means applying those rules to AIG and Citigroup and others like them long before now.

So give the administration the authority to seize the companies at the heart of the financial meltdown. Not to let them "fail gracefully." Not to force them into more corporate marriages. Not to prop them up with more billions in government investment.

Seize them, then slice them, dice them... heck, use them to make julienne fries (whatever those are). The truth is that many of these corporate monsters are much less efficient as giants stitched together by the egos of their officers, than they were as separate entities. Chop 'em up. Then put back reasonable restrictions on the merger of financial institutions so that this doesn't happen again.

Originally posted to Daily Kos on Sun Mar 29, 2009 at 06:02 AM PDT.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  From all indications (19+ / 0-)

    by Obama and Geithner they have no intention of doing any slicing or dicing. My reading of events says they are going to let private investors buy them up and if they are profitable the private investors profit. If they are unprofitable, we the taxpayers, get to bail them out too. Happy Days!

    Dubya has done for America what Scar did for the Pridelands.

    by rsie on Sun Mar 29, 2009 at 06:16:36 AM PDT

    •  I get sooooo sick... (15+ / 0-)

      ...of the bureaucrats and politicos set in place by our greedy self-centered Oligarchy calling monopolies free market. The very last thing these Mega multinational corporation gluttons want is a free market. These damned lying, manipulative, acquisitive pigs destroy free and fair markets at every opportunity and democratically based governments as well.

      The young man who has not wept is a savage, and the old man who will not laugh is a fool. George Santayana

      by Bobjack23 on Sun Mar 29, 2009 at 06:30:37 AM PDT

      [ Parent ]

      •  G-s, sure. Also, BAN the bank holding companies. (3+ / 0-)
        Recommended by:
        freelunch, Bobjack23, phonegery

        Yep.

        Eliminate the prime tool whereby OTHER PEOPLES' MONEY is used to gain control of productive organizations.

        Eliminate the bank holding company form of financial corporation.

        Fact is, cheap money is/was/will_always_be used buy personal dominance. Profitability and risk control have nothing to do with it.

        BTW: concentration -- based 100% on bank holding company excesses -- makes the system single-point-of-failure vulnerable to BLACK SWAN disasters.

        If you don't know already about the BLACK SWAN outliers, look it up on wiki.

        Droogie is as Droogie does....

        by vets74 on Sun Mar 29, 2009 at 07:28:10 AM PDT

        [ Parent ]

        •  Wrong solution. (0+ / 0-)

          Actually, a large reason for our current mess is because a lot of traditional banking moved into capital markets (ala "subprime securitization") because the capital markets companies were unable to move into banking.

          The distinction between the two is wholly artificial, and causes these severe distortions. If you want to solve the problem, rather than banning things you personally don't understand, or delegating the power to random people in the executive branch, how about we just make a rule.

          A simple rule, like this one.

          Regulatory capital required for all holdings is calculated as follows.

          r = fraction of regulatory capital required.
          m = marketshare of entity.
          r' = (1 - r)m + r = adjusted regulatory capital required.

          Voila, larger banks need to reserve more capital. This not only makes them safer, but it also makes it unprofitable to create banks that are too large, unless they are correpondingly more efficient. In which case, they will at least be correspondingly safer as well.

          Problem solved. No need to appeal to our deep philosophers in Washington to "do the right thing" in these circumstances, a mathematical formula dispatches the whole problem in one fell swoop.

          •  Management $$$$$ =EQ= The. Only. Motive. (2+ / 0-)
            Recommended by:
            Bluedoc, Bobjack23

            Economic drivers are secondary.

            And the holding company model leads to setting up shell-corporation for all manner of odd deals.

            Think anybody can regulate these messes ????

            The formulas from finance courses are irrelevant to greed/RICO operations -- AIG FP London, for one, and Merrill for another.

            Droogie is as Droogie does....

            by vets74 on Sun Mar 29, 2009 at 09:25:26 AM PDT

            [ Parent ]

    •  Too big to fail includes our planet (7+ / 0-)

      Somehow we need to begin to use this time of trouble to realize what is really at stake.

      Its not just a question of being rich or poor or maintaining an adequate buffer between us and concerns about survival. Like most of the problems which face us the solutions are global not national and cooperative rather than competitive.

      Live Free or Die --- Investigate, Incarcerate

      by rktect on Sun Mar 29, 2009 at 06:38:12 AM PDT

      [ Parent ]

    •  Get rid of Geithner and Summers. (7+ / 0-)

      These two are supply siders who were instrumental in all the deregulation that got us where we are today.  Summers was Treasury Secretary for Bill Clinton at the time when deregulation was passed in 1999 and 2000.  The Commodities Futures Modernization Act which made it impossible for the government to regulate derivatives was supported by Summers and his protege, Geithner, and it passed Congress by "unanimous consent."  The stooges of Wall St. in our Congress didn't even think this gross mistake was worthy of debate.  We need to do something about all of this.  Please call you senator and congressman.  Ask them to use anti-trust laws, to pass strict regulation over all financial institutions, and to tell Obama that he needs financial advisors who are not supply side ideologues.  The presence of Summers and Geithner in the White House is not popular around the world.  Europeans don't think Obama will do much on regulation when he has these guys telling him what to do.  I can't figure out why Obama chose the culprits of this mess to give him advice.  It's very, very disappointing.  I feel like I've been fooled, and it's not a nice feeling.

    •  The "Colonel Klink" - Hank Paulson analogy lives. (7+ / 0-)

      A corrupted government. Patriots branded as renegades. This is how we roll.

      by GreyHawk on Sun Mar 29, 2009 at 07:42:16 AM PDT

      [ Parent ]

    •  Chop..Chop ! Chop em up is the ticket (1+ / 0-)
      Recommended by:
      Bluedoc

      Survival of the fittest..Capitalisim is based on winners leading the way..The losers fall by the wayside as they should..It's the nature of things, from one celled organisims to big bussinesses..You cant fuk with mother nature without the huge risk of irreparable damage..Chop..Chop !
      Makes me think of Caddy Shack and only you other Caddy Shackophiles no why

      Desolation aint so bad..

      by memorybabe on Sun Mar 29, 2009 at 08:00:32 AM PDT

      [ Parent ]

    •  Please (2+ / 0-)
      Recommended by:
      Bluedoc, phonegery

      won't somebody in the Obama Administration pay attention to this discussion, consider the wisdom it contains, and do something to make changes. Obama needs to start channeling his inner Teddy Roosevelt--another admirable Republican--and remind these oligarchical traitors who should be in charge, who needs to be in charge, whom the American people want to be in charge. In other words, he needs to take charge.

      •  I second that plea (2+ / 0-)
        Recommended by:
        JuliaAnn, phonegery

        Does Obama not see the potential populist energy he could get behind him if he would just stand up and say enough! No more corporate coddling...no more PROFITS BEFORE PEOPLE! He could rally the whole damn world behind him if he would would stand up to the corporate fascists who have destroyed our economy and our livelihoods while getting richer and richer.

        Obama has a choice...go down as a great American president who took on anti democratic corporate fascists or just be seen as another corporate lackey.

        Dont wanna hear those screams no more of that monster giving birth

        by jonnyra on Sun Mar 29, 2009 at 08:53:28 AM PDT

        [ Parent ]

  •  Reinstate Glass-Seagall. Prevent "cartels". (11+ / 0-)

    The economic justification for the mergers of the financial firms were they needed to be big enough to finance the mergers of other firms, both were and are bad ideas.

    Much of the disastrous Reaganomics era (1980-2008) saw Wall Street engaged in predatory practice against US industry, the Milken-Boesky green-mail era where US manufacturing companies were raided for their "over funded" pension cash, for the valuable assets of capital, land and equipment they had built up to run their business. US manufacturing was decimated, pension funds looted, fortunes were made.  A share of the profits were skimmed back to the politicians (McCain and the Keating Five for example) to allow the looting of US industrial base.

    We need to do exactly as Geithner is proposing, create an new era of transparency and regulation to replace the one destroyed by Reaganomics. We also need to restore the competitive nature of the financial industry by preventing the consolidation of financial risk in just a few firms.

  •  Too Big To Fail? Never Again! (15+ / 0-)

    That's what I advocate in my diary: Geithner wants to regulate Too Big to Fail Corporations instead of breaking them up?
    in my little poll 86% of respondents agree that the Maga-Corporations need to be broken up.

    Not only will this make the economy less risky but it would reduce maga-corporations enormous influence over our Democracy undermining government's priorities to serve the public good.

    nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it. - Barack Obama

    by Lefty Coaster on Sun Mar 29, 2009 at 06:21:59 AM PDT

    •  Bingo... (11+ / 0-)

      ..I have this feeling in the pit of my stomach... we KNOW they need to be broken up.  It's not rocket science.

      But they won't do it... I just have this feeling that they won't do it.

      And if they don't... I fear that down the road the consequences will be so great that their failure to break up the megabanks will be looked at as overshadowing anything more positive that they do.

      Enough of this playing around already.  We can't treat these executives like toddlers anymore.  They all want everyone holding their frakking hands.  

      No more.  Time to start treating them like adults... and stop holding their fucking hands and break up the damn megacorps.  And start putting people in jail for committing what I will call acts of economic murder, though it's probably worse than that.

      And if the corporate execs can't grow the fuck up and take their lumps well who gives a shit anyway?!?

      They tell us to eat cake?  Then I say off with their fucking heads!

    •  I was just viewing the William Greider (10+ / 0-)

      interview by Bill Moyers. It's a great interview by Moyers, as usual, but when he showed Greider the newspaper column about where all the money from these parasitic bankers are going (to which politicians) to bribe Congress, he didn't answer the question. He went off on some bs about convincing people they are entitled to power or some such nonsense. To me that is the central problem. Human beings are fallible and will always be greedy if given the chance. For the rich and powerful, getting their way is sooooo easy, when all you have to do is pay for bribes. We need an amendment to the Constitution to stop this equating of corporations to people. As another blogger said, when we say corporations are equal to humans, we dehumanize human beings.

      Dubya has done for America what Scar did for the Pridelands.

      by rsie on Sun Mar 29, 2009 at 06:56:28 AM PDT

      [ Parent ]

      •  I saw that Moyers interview on Friday (4+ / 0-)
        Recommended by:
        mimi9, JuliaAnn, Bluedoc, trinite

        I rarely miss Bill's show.

        Bill MoyersJournal

         WILLIAM GREIDER: ...I fear what they're doing, not intentionally, but in their design is setting the crown for a corporate state.

           BILL MOYERS: A corporate state?

           WILLIAM GREIDER: A corporate state. And by that I mean a rather small but very powerful circle of financial institutions the old Wall Street banks, famous names. But also some industrial corporations that bought banks. Or General Electric, which is already half of big financial capital, GE Capital. And that circle will be our new Wall Street club. Too big to fail. Yes, watched closely by the Federal Reserve and others in government, but also protected by them. And that's a really insidious departure. To admit that and put it into law. And then think of all those thousands of smaller banks. How are they going to perform against these behemoths that have an inside track to the government spigot? And for just ordinary enterprise in general? Before you even get to the citizens. How are citizens supposed to feel about that? And I-- my point is, in this situation, with if the leading banks and corporations are sort of at the trough, ahead of everybody else in Washington, they will have the means to monopolize democracy. And I mean that literally. Some of my friends would say, hey, that already happened.

           BILL MOYERS: Yeah, the corporate state is here.

          WILLIAM GREIDER: The corporate state is here. And I'd say, let's not argue over that. The fact is, if the Congress goes down the road I see them going down, they will institutionalize the corporate state in a way that will be severely damaging to any possibility of restoring democracy. And I want people to grab their pitch forks, yes, and be unruly. Get in the streets. Be as noisy and as nonviolently provocative as you can be. And stop the politicians from going down that road. And let me add a lot of politicians need that to be able to stand up. Our President needs that to be able to stand up.

        nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it. - Barack Obama

        by Lefty Coaster on Sun Mar 29, 2009 at 08:25:26 AM PDT

        [ Parent ]

      •  Public campaign financing offsets personhood (1+ / 0-)
        Recommended by:
        Bluedoc

        at least somewhat.

        It seems difficult/impossible to undo >120 years of legal precedent dating to 1886 (Santa Clara County versus Southern Pacific Railroad).

        Presumably a majority accepts corporations as legal (person) entities (taxes, sue and be sued) but takes issue (obvious reasons) with firms as "citizens" having the same right to petition (1st amendment).

        The battle is joined when government at least exercises a moderating effect on the influence of wealth over government.  In light of the near collapse of capitalism, there seems broad democratic consensus for that now.

        On the Left we should accept that's at least minor improvement.  Too damn bad it took 1 out of 8 workers effectively unemployed to get here.

        First they ignore you, then they laugh at you, then they fight you, then you win. -- Mahatma Ghandi

        by neoconsuck on Sun Mar 29, 2009 at 08:32:20 AM PDT

        [ Parent ]

        •  Unfortunately the money (3+ / 0-)
          Recommended by:
          JuliaAnn, Bluedoc, phonegery

          in politics either waters down any public financing or guts it totally. Politicians have shown time and time again that it's not in their interests to deprive themselves of the money trough.

          I don't think the length of an injustice should have anything to do with the desire and resulting movement to change it. Look at women's suffrage. By your argument because women never had the vote in this Country, they should have just accepted that position because it had been in effect for so long.

          Dubya has done for America what Scar did for the Pridelands.

          by rsie on Sun Mar 29, 2009 at 09:18:55 AM PDT

          [ Parent ]

          •  The time has come to elect politicians with a (1+ / 0-)
            Recommended by:
            JuliaAnn

            different ethic.

            "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

            by Bluedoc on Sun Mar 29, 2009 at 10:14:42 AM PDT

            [ Parent ]

          •  Public financing excludes private... (0+ / 0-)

            Obviously that's a bridge our current champion never crossed.  

            But it's one America must.  I thought that was implicit in my response.

            Obviously, as long as there is a public/private choice, then private money wins every time (unless you're e.g. John McCain and your old, white, crotchety ideas and ideals are so bankrupt that public financing is your only option).  So, again, I am not in favor of a (public/private choice) in any way.  Public financing only.  End of story!

            Subsequent comments (duration) raised interesting issues as well.  Women's suffrage and civil rights (in general) are examples IMO of at least the minimum time we (The Left) will struggle in this country to achieve real social/economic justice after 30 years of Reagan/Bush -- not to mention 3-4 generations of baby boomers (myself included, albeit tail/suck end) probably needing to die first.  ("I hate the god damn government!  Honey, where did you put my social security check?")

            Thus, call me a hopeless pragmatist if you like.  But I honestly don't want to see the unemployment and sheer human suffering it would take to swing the pendulum faster.

            Mind you, I want to move faster than Obama does.  And certainly faster than Geithner.  But lets be honest -- there are practical limits -- there is much real inertia (bad brains) to overcome first.  But it's aging rapidly.

            I cite as (hopeful) example (for the future), Pelosi's engineering of the recent AIG 90% bonus "penalty" vote -- how could the GOP not vote for that under the circumstances -- thus she got like 70+ GOP votes, as I recall.  It was the most brilliant "stunt" yet from the Dems IMO.  And one day, votes like that will generate real change in this country.  Then we won't spend all our time arguing semantics on Kos.

            First they ignore you, then they laugh at you, then they fight you, then you win. -- Mahatma Ghandi

            by neoconsuck on Sun Mar 29, 2009 at 01:34:36 PM PDT

            [ Parent ]

    •  We already have the megagiants...let's regulate (3+ / 0-)
      Recommended by:
      vets74, RustyCannon, whoknu

      then break them up.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 07:05:09 AM PDT

      [ Parent ]

    •  Its not just corporations that need to be smaller (4+ / 0-)

      As a planet we need to rethink urban and rural, distribution of resources, industrialization, what happens if things get out of balance globally.

      In some ways its a lot easier to deal with an economic failure than what we are really facing.

      Live Free or Die --- Investigate, Incarcerate

      by rktect on Sun Mar 29, 2009 at 07:12:41 AM PDT

      [ Parent ]

  •  My fear (11+ / 0-)

    Obama will jump start our economy, it will get rolling again and we will forget about reform. Then the next republican elected president, who will make Bush look like a Nobel prize winning economist, will cause a collapse even worse than what we have today. That will be the beginning of real reform, but it will come far too late.

    Do Pavlov's dogs chase Schroedinger's cat?

    by corwin on Sun Mar 29, 2009 at 06:22:41 AM PDT

  •  From my diary when Bare Sterns collapsed April 08 (11+ / 0-)

    Euthanize Wall Street to save the economy


    by NBBooks

    Tue Apr 22, 2008 at 07:30:27 PM PDT

    Consider the conclusions of a February 2005 report, by the Federal Deposit Insurance Corporation Consolidation in the U.S. Banking Industry: Is the Long, Strange Trip About to End?, on the effects of the emergence of the mega-banks like J.P. Morgan Chase, HSBC, Citibank, Bank of America, and Wachovia.

    In addition to lacking consensus on cost efficiency gains, empirical work to date has also failed to find substantive evidence of other benefits that one might hope consolidation would yield. For example, there is little evidence that either consumers or shareholders have benefited from consolidation in the industry. In fact, there is growing evidence that increases in market power at the local level may be adversely affecting consumer prices (for both depositors and borrowers). And as we mention above, there is also some evidence that managers might be pursuing mergers and acquisitions for reasons other than maximizing firm value (researchers who have studied the issue have consistently found support for the idea that empire building and increased managerial compensation are often a primary motive behind bank mergers). Finally, findings from several researchers suggest that industry consolidation and the emergence of large complex banking organizations have probably increased systemic risk in the banking system and exacerbated the too-big-to-fail problem in banking.

    Did you catch that? empire building and increased managerial compensation are often a primary motive behind bank mergers.  Forbes reported last week that the five principals of Goldman Sachs were paid over $300 million. This is really what the game has been about for the past thirty years.

    A conservative is a scab for the oligarchy.

    by NBBooks on Sun Mar 29, 2009 at 06:24:32 AM PDT

    •  I think that greed is the driving motive behind (1+ / 0-)
      Recommended by:
      lightfoot

      the whole scenario...with Phil Gramm quietly behind the scenes making it all possible...then he goes to the UBS.  

      empire building and increased managerial compensation are often a primary motive behind bank mergers.

      We have been HAD by the randian republicans and their purchasing of the MSM...while with their overly-wide-eyed-innocent expressions and protestations they brainwash the gullible with talk of "left-biased press", "conspiracy-theorists", "raise your taxes", "debt for our children and grandchildren", "cost of entitlement programs like social security and medicare", "increase the size of government", ad nauseum.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 07:33:55 AM PDT

      [ Parent ]

    •  Correction :: "a primary motive" ??????? (1+ / 0-)
      Recommended by:
      Bluedoc

      Let's try the obvious.

      Empire building and increased managerial compensation are THE ONLY MOTIVES, EVER behind bank mergers.

      WHAT ELSE ?

      So's they can get bigger and bigger and buy sports teams and get invitations to posh coke parties ???

      So they can get a date with Lindsey Lohan ?

      Maybe the bank mergers could halt global warming ?

      Droogie is as Droogie does....

      by vets74 on Sun Mar 29, 2009 at 07:35:05 AM PDT

      [ Parent ]

  •  It's actually Salomon Brothers, with an "a" (4+ / 0-)

    Don't ask me why I know or care. I just do.

    Now go check the serial # on your dollar bills and get back to me.

    ;-)

    (P.S.--there actually is a Solomon Brothers, which is in the jewelry biz.)

    He who tills his land shall have plenty of bread, but he who chases fantasies is void of understanding. (Proverbs 12:11)

    by kovie on Sun Mar 29, 2009 at 06:26:36 AM PDT

  •  Well, Yeah, But Good Luck with THAT Idea (7+ / 0-)

    I think we may be able to actually get health care reform, in exchange for surrendering sovereignty of Constitutional government over the upper half of the economy.

    We seem to have cut a similar deal with the Pentagon a generation ago or so.

    Sunday morning is just my special space for optimism.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Mar 29, 2009 at 06:27:44 AM PDT

  •  Nail -> Head (8+ / 0-)

    Bingo!  Split them up!

    I'm HOPING that this is what Obama is moving towards.  I am, however, fearful that the weight of position and expectation may play on his emotions.  It's one thing to be nuanced and not do what your electing constituency thinks you might do (like escalate Afghanistan - even though that was clearly something he said he was going to do in his campaign, I think people are in shock because of the scope, or perhaps they have wishful memories) but to do something seen more "normal Washington" because it's the right thing to do...

    ...it's a completely different thing to get out of one's comfort zone and get put into a position of just doing what people are telling him to do, or perhaps worse what he was expected to do.

    Good people get into bad positions every day because they do what they think is expected of them.  In this case I think the problem is the Beltway Bubble... which to his credit, he's spent a lot of time staying out of.  But the beltway mentality seems to be "You can't split them up!  They're too important!"  Just not to the people in actuality... we don't give a crap who we get funding from as long as they're not screwing us.

    I think the refrain of "Too big to fail; too big to exist" is echoed pretty heavily out here on Main Street.  We all HATE the megabanks.  They raise our rates.. they work against us... they're Goliath and we're David, only we're missing a sling.  The megabanks are screwing the people... and what's more... we know it.

    We need our elected leaders to be our slings.  We'll be the rocks.

    Just please, please, Obama Administration... Break up the megabanks!  Segregate them.  Regulate them so that this can NEVER. HAPPEN. AGAIN!

    •  I see a resolve in our President that encourages (2+ / 0-)
      Recommended by:
      lightfoot, Eireknight

      me to believe that he is moving forward in a way that will remedy the situation...but he seems to move cautiously since he knows the law and (unlike our previous president) is obligate to operate with it.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 07:41:42 AM PDT

      [ Parent ]

      •  ...and that's fine... as long as... (2+ / 0-)
        Recommended by:
        Bluedoc, lightfoot

        he takes the right steps, I'm happy.  But something has to happen.  I see too much hand-holding going on.  I'll give him the benefit of the doubt and I do think Obama is great... but I have this fear that it's not going to happen.

        •  He is on a tightrope...this whole thing is (2+ / 0-)
          Recommended by:
          lightfoot, Eireknight

          fragile and the powers behind each faction are too great to naively ignore.  He is informed and brilliant.  He has a better chance of getting us there than anyone else I have seen.  I don't expect him to adopt the rethug mode of bullying his way through.

          "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

          by Bluedoc on Sun Mar 29, 2009 at 09:53:36 AM PDT

          [ Parent ]

    •  I think that he knows he can't get anything (0+ / 0-)

      meaningful through the Senate. The minute he tries, the pressure will be put on, and all the Democrats who have been getting major election help from corporations will hit the talk shows and start the "Yes, but in this case I can't support Obama because...".  They will take turns being the naysayers and voters against who will join  the Republicans, and somehow, nothing meaningful will be passable.

      Justice, if not pursued, does not exist.

      by phonegery on Sun Mar 29, 2009 at 12:09:07 PM PDT

      [ Parent ]

  •  Please read The Quiet Coup in The Atlantic (10+ / 0-)

    "The greatest service which can be rendered any country is to add an useful plant to its culture" -- Thomas Jefferson

    by tommurphy on Sun Mar 29, 2009 at 06:31:30 AM PDT

  •  Congress chose to pass Gramm-Leach-Bliley, (8+ / 0-)

    That was written by lobbyists in a bald attempt to slant the field.  And it succeeded.  Gramm later said he didn't understand the bill he supposedly sponsored and wrote.

    Excellent report.

    •  Granted Gramm is an ignorant ideologue... (4+ / 0-)
      Recommended by:
      Bluedoc, lightfoot, vets74, RustyCannon

      ...with a desire to become wealthy without a single thought for what it costs others but I think the bastard knew exactly what he was sponsoring and for whom and still didn't give a damned because his personal payoff was huge. The American people should shun him. Personally I wouldn't walk across the street to piss on the prick if he were on fire.

      The young man who has not wept is a savage, and the old man who will not laugh is a fool. George Santayana

      by Bobjack23 on Sun Mar 29, 2009 at 06:45:52 AM PDT

      [ Parent ]

    •  Then who the H wrote it...can't believe Gramm is (0+ / 0-)

      just a tool...he has maneuvered his way into the UBS...that rethug "denial" of any complicity is wearing thin on all of them.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 08:34:23 AM PDT

      [ Parent ]

    •  From what I read, he slid most of his bills in at (0+ / 0-)

      the last minute just before Congress left for Christmas Holidays...when no one would pay attention.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 09:56:28 AM PDT

      [ Parent ]

  •  OT: CNN's John King playing gotcha (6+ / 0-)
    Clearly wanting Petraeus to agree with Cheney, slamming Obama and the Democrats, and generally pushing McCain talking points. Disgusting.

    BTW, Petraeus should be fired.

  •  problems (8+ / 0-)

    A corporation should not be considered as a person in court.  Executives must be financially and legally accountable for their acts--as if they were self employed.  Also, Americans must accept the fact that socialism isn't the Devil's work.  Socialized medicine and socialized banks would be a good thing.  I wish the government opened up new banks, with a lot of cash and a clean slate.  This bank would compete with the dying behemoths--and money would be lent to stimulate the economy.  

    This is probably not doable with less than 60 sure Senate votes--and therefore, we're stuck playing ball with Voinovich as the umpire.  And stuck we are.

    •  Yes...when rethugs scowl and say "socialism" or (1+ / 0-)
      Recommended by:
      JuliaAnn

      "librul"...why do people back away from the terms????

      And...

      and money would be lent to stimulate the economy.  

      Hopefully at reasonable interest rates that will allow people to actually pay down the debt.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 08:47:46 AM PDT

      [ Parent ]

  •  This is what needs to be done. If you just try to (5+ / 0-)

    make these "too big to fail" companies more solvent than the best we can hope for is another bubble and  then we will be back here in a few years. As you said they need to be chopped up and regulated. You think people would have learned these lessons in the 20's and 30's but I guess not.

    All of the true things I am about to tell you are shameless lies.- Bokonon

    by ryan81 on Sun Mar 29, 2009 at 06:33:41 AM PDT

    •  No...the wingnuts are too busy trying to re-write (1+ / 0-)
      Recommended by:
      phonegery

      history.  Whoever shouts the loudest wins.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 08:48:42 AM PDT

      [ Parent ]

  •  Yes and Yes! (5+ / 0-)

    If we get anything out of living through the Great Bushwhack, let's hope it's a new understanding that the market fundamentalists are simply anti-American nuts.

    If you are a Liberal, a progressive or a political activist, a "gate-breaker", you cannot lose sight of this simple fact.

    It is not your (our) fight to make our 401Ks grow or Wall Street to reach 15,000pts again and certainly not cheer the Banks being profitable again.

    Are we fighting for ideas and principles or just for the Geinther plan to "succeed" (whatever that means)?

    "It takes two to lie. One to lie, one to hear it." Homer Simpson

    by Euroliberal on Sun Mar 29, 2009 at 06:34:47 AM PDT

  •  I Interviewed in AIG's corporate offices (14+ / 0-)

    several years back from a fairly high level Financial reporting / accounting role.

    The VP I interviewed with commented on how there were over 10,000 different entities under AIG's umbrella.  That means 10,000 different subsidiaries, partnerships, affiliates, etc.

    That was 10,000.

    I also got the impression that the accounting people had no lives and were working 12-15 hours a days 6-7 days a week.

    But, I thought at the time that a corporate office trying to track and account for 10,000 different entities all over the world, with different accounting laws for each country, different currencies, etc was a friggin' nightmare. It's really a dizzying amount of data.

    And, if people are working 80-100 hours a week, they're going to be too burned out to be able to get a grasp of the whole picture, because that whole picture was so damn big.

    What was even scarier was the guy asked me how good my Excel skills were, and he asked me to do a quick demo on his laptop... I said they were pretty good, maybe an 8 or 9 out of 10.  Based on the data he gave me, I showed him a fairly simple vlookup and he then said nobody on his staff could do that and that I should have rated myself a 10+????  So, his staff was making intensive use of Excel, but did not have beyond intermediate skills with it.

    "I'm not a member of an organized political party - I'm a Democrat." Will Rogers

    by newjeffct on Sun Mar 29, 2009 at 06:35:20 AM PDT

    •  The overwhelming complexity of A.I.G. (4+ / 0-)
      Recommended by:
      Bluedoc, Donkey Hotey, RustyCannon, whoknu

      boggles my mind.

      nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it. - Barack Obama

      by Lefty Coaster on Sun Mar 29, 2009 at 06:52:54 AM PDT

      [ Parent ]

    •  wouldn't it have been worth it for them (3+ / 0-)
      Recommended by:
      Bluedoc, vets74, whoknu

      to do an advanced skills trainging on Excel for their staff?  If people had the advanced skills to save time by using features, they wouldn't get burnt out so fast, and there would bee less turnover.

    •  Same thing for Oracle databases. (4+ / 0-)
      Recommended by:
      mimi9, Bluedoc, phonegery, lightfoot

      Not. A. Clue.

      Mountains of reporting system -- zip-zero application of the analytical functions.

      They have to move data through irrational temporary tables -- as though its SQL Server -- where the analytical functions are the proper tool.

      Same for doing web sites.

      Same for their overnight systems.

      Mainframe coding technology -- typical of all the holding company behemoths. All their top-level tech management people do is to try to avoid visibility -- avoid responsibility -- avoid changing anything that's in production.

      BTW ::: Dilbert is an optimist.

      Dogbert ran AIG FP London. Woof !!

      Droogie is as Droogie does....

      by vets74 on Sun Mar 29, 2009 at 07:54:29 AM PDT

      [ Parent ]

    •  That gives a good picture of what they were doing (1+ / 0-)
      Recommended by:
      mimi9

      So, his staff was making intensive use of Excel, but did not have beyond intermediate skills with it.

      These people weren't the ones making the big bucks.

      The week before it all hit the fan with AIG my "financial advisor" for my 403b called and asked if I had any money I would like to invest.  He had previously told me I could no longer invest in my 403b since I had retired.  When I reminded him of that he said "Well...some opportunities for investments have come up."

      When it hit the news the following week I called him back to confront him.  He laughed.  

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 08:53:44 AM PDT

      [ Parent ]

  •  Like I posted over a week ago... (3+ / 0-)
    Recommended by:
    Euroliberal, lightfoot, RustyCannon

    Remember -- this election was NEVER about Obama -- it was about YOU.

    by SammyJames on Sun Mar 29, 2009 at 06:35:58 AM PDT

  •  Conservativism and True Competition (3+ / 0-)
    Recommended by:
    seabos84, lightfoot, Lavocat

    True "conservatives" should agree with your post and oppose monopolization of the financial markets by the largest players.  Antitrust enforcement has been neglected for years, and competition among financial institutions is a good way to spread risk.

    I have a small law firm that advises mainly hedge funds active in the secondary loan market.  So many major dealers have disappeared in the past six months--Bear, Lehman, Merrill, Wachovia--that it has become increasingly more difficult to deal with the larger remaining dealers such as JPMC and Citi, who wield greatly increased power over trade terms, pricing and documentation.  One positive development is that many smaller dealers have made a push for market share. The remaining larger dealers haven't liked this too much, and recently spoke out against this trend at an industry conference I attended, claiming that more expensive debt prices are a small price to pay for the security and liquidity of doing business with the larger remaining dealers.  I believe, conversely, that stronger antitrust enforcement would help restore balance in negotiation of documentation in the secondary loan market.

    As for the increased powers that Gethner is seeking, they are at least in part a result of the technical problem that the predominant regulatory structure for insurance companies has been state, not federal, but I tend to agree with Joe Nocera's column yesterday  that this is being done in part as a prelude to the ultimate government takeoever of some of these institutions, which I think will be a good thing.  A big question is going to be:  after the takeovers take place, are the sale rules going to be stacked in favor of very large buyers?  Hopefully not.

    •  Agreed, the "era of deregulation (1+ / 0-)
      Recommended by:
      Bluedoc

      and corporate mergers" was not "conservative" at all,but rather a radical reorganization of society that can be viewed precisely as a logical extension of the forced economic liberalism and imposition of the "self-regulating market" described by the economic anthropologist Karl Polanyi in his 1944 work "The Great Transformation" (Google preview and reviews).

      Polanyi documented the repeated government interventions that were necessary to establish and sustain liberal capitalist market, and the disastrous effects that these interventions had on the majority of society. Polanyi recognized that it was the government's responsibility to mitigate the suffering forced upon the general population caused by these interventions that were imposed at the point of a gun. (For a good review, see "Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time. 1944. Review Essay by Anne Mayhew.)

      Polanyi's work came at the end of the first wave of "laissez-faire" liberalism that had come crashing down in the Great Depression and the Second World War. The Reagan-Thatcher era can be viewed as the beginning of the second wave of radical change that has led us through the periods of hypercapitalism and its degeneration into crony capitalism under Bush II. Trying to preserve this system intact can only lead to global catastrophe for the vast majority of the population. The institutions that have brought us to the brink must be dismantled and replaced with a new sustainable economy created both by top-down government action buoyed by vigorous bottom-up pressure from the grassroots.

      The illusion of freedom will continue as long as it's profitable to continue the illusion. -FZ

      by lightfoot on Sun Mar 29, 2009 at 08:08:40 AM PDT

      [ Parent ]

      •  I wonder how many years it will take for the (1+ / 0-)
        Recommended by:
        lightfoot

        fall-out of the rethug rape of the nation to be understood.  We are still in the deep dark forest without a compass.  We have a leader who is trying to get us out of this mess.  We need to do all we can to support his efforts.

        "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

        by Bluedoc on Sun Mar 29, 2009 at 08:59:00 AM PDT

        [ Parent ]

        •  Obama is pitted against the corrupt institutions (1+ / 0-)
          Recommended by:
          Bluedoc

          that have developed since WWII and were greatly empowered under the Reagan and Bush II regimes. The power of the multi-national corporations with their congressional pawns, the military-industrial-spy complex, the police state/justice system/prison economy, the financial sector, and the corporate media are all pushing against real reform and fighting to retain the status quo. Obama's intentions may be good, but his political pragmatism has placed him into the position of supporting some of these institutions over the interests of the people. I do support many of Obama's positions, and I sincerely hope his current mistakes are only a ruse to force real change later, but I cannot support the Geithner Plan in its current form. Rewarding the people and institutions that have brought us this disaster is a grave financial risk that can only succeed in the short term, if at all. It does not bring the deep reform that is needed to create a truly sustainable 21st Century economy.

          The illusion of freedom will continue as long as it's profitable to continue the illusion. -FZ

          by lightfoot on Sun Mar 29, 2009 at 10:04:54 AM PDT

          [ Parent ]

          •  I sincerely hope that he is merely adding oil (2+ / 0-)
            Recommended by:
            phonegery, lightfoot

            to an engine in bad need of repair long enough to diagnose the broken parts and figure out now to repair it.  I think he is trying to keep it running long enough to keep it from grinding to an untimely halt.

            I see no way it could be fixed overnight.

            The power of the multi-national corporations with their congressional pawns, the military-industrial-spy complex, the police state/justice system/prison economy, the financial sector, and the corporate media are all pushing against real reform and fighting to retain the status quo.

            Add to that the crime syndicate (where did they go?...heard waaay back that they "went into legitimate business"...), the drug cartels, etc.  (Robert Ludlum addressed some of these same issues in his novels.)

            "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

            by Bluedoc on Sun Mar 29, 2009 at 10:12:46 AM PDT

            [ Parent ]

      •  Addendum: From Karl Polanyi's son, (2+ / 0-)
        Recommended by:
        Bluedoc, phonegery

        Kari Polanyi Levitt (bNet Monthly Review, June, 1995), selected quotes:

        Fantastic as it may seem--"Utopian" as Polanyi would have said--the policy prescriptions favored by the neo-utilitarian ideologues of our day are modeled on the glory days of nineteenth-century economic liberalism. The fourth quarter of the twentieth century has been described as the "Age of Hayek," in contradistinction to the third quarter as the "Age of Keynes." A reading of Hayek reveals a radical liberal vision of the economy as a structure "arising without design from human interaction." The "macroeconomics of the last fifty years" is demonized as a delusion... the nearest thing to the practice of magic ... by professional economists whose extensive use of mathematics has unduly impressed politicians lacking in mathematical education.

        ...Today, the power of financial capital is greater and much more invasive than was the case in the interwar period. At the same time, it is less transparent. Today it is not clear who is pulling the strings that reign in debtor governments. Global finance appears to have acquired a life of its own, as a mass of disembodied money enveloping the globe, able to descend from the skies to mount attacks on currencies and cause politicians and senior public servants sleepless nights waiting for the reaction of the markets and credit ratings of government bonds. But this gigantic engine of inequality which operates to transfer real wealth from the weak to the strong, from debtors to creditors, from productive to financial activity, is not the autonomous creation of a technological revolution in communication--as is widely believed--but was instituted by deliberate state action in the interests of the owners of capital assets.

        The challenge is to reclaim the state for society as an instrument to regulate and contain disembodied capital. This cannot come about until common societal interests prevail over individual greed and gain. It is the task of the social movements which have received increasing attention--also here in this conference--to harness the forces of democracy to challenge financial power. The task is today more difficult, especially in the rich North because creditor interests which drive restrictive monetary policies and the privatization of public and social infrastructure--including education and health--have won the support of the new middle classes, including millions of wage and salary earners concerned to maintain the value of their assets, whether in the form of institutional savings or equity in home ownership. The "proletariat" with nothing to lose, insofar as it exists in the North, is an impoverished underclass, generally of ethnic origin other than that of the majority, with no voice in society. The opinion-making elites, including the media and the academic community, reflect the concerns of the "haves" of tbe world.
        [...]

        The illusion of freedom will continue as long as it's profitable to continue the illusion. -FZ

        by lightfoot on Sun Mar 29, 2009 at 09:28:58 AM PDT

        [ Parent ]

  •  Maybe not as simple as it sounds (5+ / 0-)
    when the major global corporations are bigger, finance-wise, than most countries.

    The combined annual revenues of the Top 20 global corporations exceed the GDP of every government entity in the world except for the US, the EU and Japan (and pretty close to surpassing Japan). Those total revenues also exceed the combined GDP of two continents - South America and Africa.

    Seriously, if you included corporate revenues in the list of the GDPs of the 180-something sovereign nations, Exxon-Mobil would be #21 and Wal-Mart would be #28.

    And Exxon-Mobil's annual NET profit is roughly equal to the entire federal budget of Venezuela.

    Opposition to an ideology is not inherently another ideology. When you're at the South Pole, there's no other direction to go but north.

    by sxwarren on Sun Mar 29, 2009 at 06:42:22 AM PDT

    •  So, because it is difficult (3+ / 0-)
      Recommended by:
      Bluedoc, sxwarren, freakofsociety

      we should not do it?

      Let's bust them up in little pieces so they can't hold us hostage like this.

      by RustyCannon on Sun Mar 29, 2009 at 07:03:30 AM PDT

      [ Parent ]

    •  so does that say who rules the world? (5+ / 0-)

      The corporatocracy of first world countries?

      Find your own voice--the personal is political.

      by In her own Voice on Sun Mar 29, 2009 at 07:09:04 AM PDT

      [ Parent ]

      •  Corporatocracy, yes. (1+ / 0-)
        Recommended by:
        In her own Voice
        But the "of first world countries"?  As if those corporations belong and are beholden to any specific countries?  Maybe they're not quite as independent of their origins as the Cylons, but between sovereign governments and the corporatocracy, it's pretty clear which is now David and which is Goliath.

        Opposition to an ideology is not inherently another ideology. When you're at the South Pole, there's no other direction to go but north.

        by sxwarren on Sun Mar 29, 2009 at 12:54:20 PM PDT

        [ Parent ]

        •  my meaning was that there is a global (1+ / 0-)
          Recommended by:
          sxwarren

          corporatocracy including the multi-national corporations that originated in various countries.  They form a network of economic power and control, operating generally by the same tactics and towards the same goal--co-option of the world's resources without regard to the indigenous populations they encounter.  A more insidious form of colonialization.

          The current global economic debacle will force them to work out some agreements about how to protect what they've gotten and continue to operate.

          Where do the rest of us fit in--that's the question.  It seems we in America who are not a part of the "in" crowd are no better off than the peasant classes of the world.  The latest banana republic...

          Just hope Obama can make a difference--he definitely has his work cut out for him if he takes it on.

          Find your own voice--the personal is political.

          by In her own Voice on Sun Mar 29, 2009 at 02:19:31 PM PDT

          [ Parent ]

          •  Where do the rest of us fit in? (1+ / 0-)
            Recommended by:
            In her own Voice
            Heh.

            Perhaps you've heard of an obscure film call "the Matrix"?

            Another concern for me is that the geopolitical cage match appears to be shaping up as the Western Corporatocracy (the USD-based "community') versus Russia and China, the governments of both of which have been increasingly behaving like corporate boards and driving their countries as capitalist corporations.  And they want an alternative reserve currency to the USD.  And then there's the government of Iran (and there WAS Saddam Hussein), which apparently wants oil traded in something other than the USD (far more dangerous to Western corporate interests than any nuke).

            Yep.  I think the reality of global conflict is a whole different picture from the one portrayed in our ever helpful Western MSM.  Except for all the innocents maimed and dying in proxy wars, of course.

            Opposition to an ideology is not inherently another ideology. When you're at the South Pole, there's no other direction to go but north.

            by sxwarren on Sun Mar 29, 2009 at 09:00:52 PM PDT

            [ Parent ]

            •  We've been thinking along the same lines (0+ / 0-)

              and maybe reading some of the same material.  Clearly, we've shared in the ritual communion of the red pill. >:-(

              Yes, you can see the lines being drawn... and don't leave out the new Latin American countries who refuse our economic pressure and have been strong enough (or well placed enough) to get away with it.  Many in the past have been eliminated.  Chavez, Lula, Bolivia, Ecuador have closed their doors to us. I don't believe they want to join with Russia, China or Iran, but it's likely that's who they'd go to if their economies started to sink.

              On the reserve currency--I've been hearing that tune from many directions (like the Final Five hearing All Along the Watchtower on BSG) first subtly, then blaringly. Yeah, our oligarchy will fall hard b/c they won't give up easy.

              I just read tonite an article in The Atlantic by
              Simon Johnson, a professor at MIT’s Sloan School of Management, who was the chief economist at the International Monetary Fund during 2007 and 2008.

              The Quiet Coup

              Good one...

              Find your own voice--the personal is political.

              by In her own Voice on Sun Mar 29, 2009 at 09:31:00 PM PDT

              [ Parent ]

              •  Chavez has been courting Putin (1+ / 0-)
                Recommended by:
                In her own Voice
                to form an "OPEC" of natural gas for years now, as well as to gain a protective ally against the Bush regime (just a halfway decent diplomatic effort by the Obama Admin might woo Chavez back to a more US friendly position, though.)

                If I understand correctly, Russia and Iran together hold something like 55% of the world's natural gas reserves, though both remain largely undeveloped. And both have sought technical assistance from China to develop those resources.

                Opposition to an ideology is not inherently another ideology. When you're at the South Pole, there's no other direction to go but north.

                by sxwarren on Mon Mar 30, 2009 at 04:19:59 AM PDT

                [ Parent ]

  •  This comes from Multinational Monitor's (8+ / 0-)

    outstanding piece  

    Wall Street’s Best Investment: Ten Deregulatory Steps to Financial Meltdown

    9. Merger Mania

    From 1975 to 1985, the number of commercial banks was relatively stable at about 14,000. By 2005 that number stood at 7,500, a near 50 percent decline.

    Regulators rarely challenged bank mergers and acquisitions as stock prices skyrocketed and the financial party on Wall Street drowned out the critics. But many argued that "bigger is not better" because it raised the specter that any one individual bank could become "too big to fail" (TBTF) or at least "too big to discipline adequately" by regulators. The 2007-2008 financial crisis confirmed these fears.

    Studies have shown that compared to smaller banks, large banks take on greater risk in the form of lower capital ratios (i.e., increased leverage), more investments in derivatives, higher percentages of uninsured deposits, lower levels of core deposits, higher percentages of loans, and lower levels of cash and marketable securities. TBTF policy effectively operates as a government subsidy — and worse, an incentive — for this kind of risk-taking, thereby increasing the vulnerability of the entire banking system and the likelihood of massive taxpayer-funded bailouts. Federal Reserve economists found that the banking crisis of the late 1980s occurred because "large banks adopted a riskier stance, beyond what could sensibly be explained by scale economies."

    Supporters of bank consolidation argue that bigger banks create greater efficiencies because of their larger economies of scale. But several studies have shown that large bank mergers during the 1980s and 1990s failed to improve overall efficiency or profitability. Indeed, most studies found that post-merger cost increases and revenue losses offset any savings that the resulting banks accrued from cutting staff or closing branches.

    Evidence indicates executive compensation plays a central role in the quest for larger banks. This "empire-building," as Federal Reserve economists put it, occurs because compensation tends to increase with firm size, "so managers may hope to achieve personal financial gains by engaging in [mergers and acquisitions]." George Washington University banking law professor Arthur Wilmarth, Jr. agrees. "Not surprisingly," he says, "studies have shown that managerial self-interest plays a major role in determining the frequency of mergers among both corporations and banks."

    This piece made me proud to be a long time Multinational Monitor subscriber.

    nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it. - Barack Obama

    by Lefty Coaster on Sun Mar 29, 2009 at 06:44:38 AM PDT

  •  The chopping up of A&TT (5+ / 0-)
    Recommended by:
    Bluedoc, vets74, Lavocat, RustyCannon, whoknu

    gave us companies that now are the major competators in the cell phone industry (Cingular and Verizon).  Because of the competition between the two, we have lower plan rates, and good ideas (like free night and weekends, or free calls between people with the same company) are picked up quickly by competators.  If A&TT had not been split up, it might have gained so much dominence in the cell phone industry early on that noone would have been able to catch up.  Less competition = higher prices, esspecially for something so technology driven.

  •  Geithner's new powers will do the job (6+ / 0-)

    ... but not in the way people think.

    Wall St. CEOs hate the idea of having the government in their boardrooms. Witness the stampede to give back the TARP money.

    If growth threatens to take a company to a level where that would occur, the CEO will damn well make sure that the growth doesn't happen. No one will have to slice and dice huge companies. Most CEOs and Boards will do it for us to stay out of the clutches of government regulators.

    By merely existing, these powers will probably ensure that they are seldom, if ever, used. The only exceptions are institutions that are already at that scale. Mark my words. If this regulatory regime is in place, there will be a flurry of spin-offs and divestitures.

    -2.38 -4.87: JustAShotAway's friend Ryan: "Go big or go home"

    by grapes on Sun Mar 29, 2009 at 06:50:34 AM PDT

    •  we can hope (2+ / 0-)
      Recommended by:
      Bluedoc, lightfoot

      The indignation I saw at the mere thought of govt regulation/takeover power from some banks at a recent local Finance luncheon is almost too funny.  At the mention of the subject the first words out of their mouth were "We are giving the money back!"  These were not the top people either so obviously the word was passed down.

      Nature's laws are the invisible government of the earth - Alfred Montapert

      by whoknu on Sun Mar 29, 2009 at 07:43:13 AM PDT

      [ Parent ]

    •  Don't expect CEO's to do anything for you. (1+ / 0-)
      Recommended by:
      Bluedoc

      And the Boards do the bidding of CEO's who usually are responsible for choosing them.  CEO's work for themselves first and the bottom line next.

      •  That's my point (2+ / 0-)
        Recommended by:
        Bluedoc, phonegery

        CEOs won't keep companies small to please us or for the common good. Rather, they will keep them small and 'boutique' so they don't have to face government oversight.

        They will do it out of naked self-interest.

        For the few companies that elect to grow big enough to attract government scrutiny, they will be doing it with their eyes wide open. No excuses.

        -2.38 -4.87: JustAShotAway's friend Ryan: "Go big or go home"

        by grapes on Sun Mar 29, 2009 at 08:45:21 AM PDT

        [ Parent ]

    •  That makes sense...nt (0+ / 0-)

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 09:04:02 AM PDT

      [ Parent ]

    •  Problem is enforcement! Who returned TARP $s? (0+ / 0-)

      Yes, CEO's/Boards will do what's necessary to stay out of the clutches of government.  The current method of evading antitrust laws is to use influence to avoid enforcement: bribe all the politicians while infiltrating & neutering the regulators.

      Breakups will only happen if the threat of a government led breakup is credible.  Maybe if a few companies are broken up every decade.

      As for stampedes, the only stampede has been on the public trough by the financial industry: through TARP, AIG-counterparty payments, TALF, PPIP, Citi/BofA asset guarantees, & so on.

      The 'threats' of returning the money are just that - threats!  I love that Goldman Sachs threatens to return its $10B TARP theft after it steals another $13B in counterparty payments from taxpayers via AIG.  And then they tell us that they didn't need the AIG money anyway because they were hedged/insured elsewhere.  Give me a break...they just sold us the Brooklyn Bridge 100 times over!

      IMO, any givebacks on TARP will come only when they figure out that PPIF or some other scheme is more lucrative!

  •  Several points come to mind when I read (3+ / 0-)
    Recommended by:
    Bluedoc, Lavocat, whoknu

    this diary.

    First of all, regulations must be passed and the reinstatement of Glass-Steagall is an obvious thing that can be done. This will force separation of banks by function and will protect banks dealing with personal banking and smaller loans from the dangers caused by investment banking and losses of commercial and bigger banks.

    Secondly, people for some reason cannot seem to understand that during an economic crisis, further centralisation and concentration of capital is a normal thing so as to eliminate redundant capital. This pattern was already noted by Marx in Capital and is evident if one examines all economic downturns under a capitalist economic system.

    Third, as a result of 2, breaking up these corporations during a crisis is truly nonsensical as what will happen is that smaller firms will be unable to compete and will quickly be swallowed up again leading to the situation we have. If we want to break up monopolies, oligopolies, cartels, etc., it is better to wait until the crisis has passed.

    Finally, people keep on insisting that the system operates better when it is "competitive" as opposed to when there are multinational corporations ... I am not aware of evidence that this is the case and that increased gains are more easily passed onto workers in that situation than when capital is more concentrated. It is almost as though the age of competition (like in the 19th century) was a golden age for workers and capitalism; hopefully someone can explain to me this longing for this non-existent period when capital and labour were friends and all worked together.

    No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

    by NY brit expat on Sun Mar 29, 2009 at 06:50:57 AM PDT

    •  Concentrating wealth is good at this time? (3+ / 0-)
      Recommended by:
      Bluedoc, lightfoot, JeffW

      You've got to be kidding. One of the reasons the economy is in the shitter is because the masses have no money to spend. When the masses have no money to spend, there is no market for products. A mass market for products and services is what drives the economy. Trickle down is only effective in sewer systems.

      Post WWII in the US, right up until around 1980, working people in this country could support a family working 40 hours a week. Unions bargained to get a fair share of productivity gains when they occurred. Large companies, especially ones that affected national security, were highly regulated. That period of time was the economic pinnacle of the USA. It is the period that made the USA the envy of the world.

      Let's bust them up in little pieces so they can't hold us hostage like this.

      by RustyCannon on Sun Mar 29, 2009 at 07:14:00 AM PDT

      [ Parent ]

      •  Concentrating capital at this time is (3+ / 0-)
        Recommended by:
        Bluedoc, RustyCannon, whoknu

        not good, it is just that this is a part of the process that occurs during an economic crisis. Breaking up the large firms will not change this fact as they will quickly reconstitute. Smaller firms fail during a crisis as they are unable to compete and are swallowed up by larger firms.

        This is different than the concentration of wealth which is in my opinion never good. What is desperately needed at this time is actually a redistribution of wealth from the extremely wealthy to the middle and working class and the poor. This can be done through progressivity of taxation, increasing minimum wages and the wages in general, increased transfer payments to ensure the poor are covered in this crisis ... in other words Keynesian fiscal policy. Putting money in the hands of the poor and working and middle classes who will spend the money will stimulate demand which will hopefully stimulate production, employment, investment and growth which is what is needed to get us out of the crisis.

        We also need to restructure manufacturing in order to be more responsive to environmental considerations and to be more consistent with demand both domestic and international.

        There is a rather big difference between wealth and capital and the fact that capital concentrates during an economic crisis is a normal part of the crisis. The fact that income distribution is so bad skewed in favour of the wealthy in the US is due to horrific government policies making the US the most unequal of all the advanced capitalist economies in the world.

        No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

        by NY brit expat on Sun Mar 29, 2009 at 07:25:33 AM PDT

        [ Parent ]

        •  Thanks for your detailed responses (2+ / 0-)
          Recommended by:
          Bluedoc, NY brit expat

          You're obviously far more educated on these matters than I am and I don't expect you to bring me to your level here in the comments. That said, it still makes no sense to me why AIG, for example, can't be broken up into at least distinct lines of business. Doing so would undo the partial fallacy of "economy of scale" and force the various lines of business to hire more people. That, in itself, would help distribute some of the wealth of these companies downward. At the same time, smaller, more nimble companies with leadership focused on the long term viability of the smaller business entities would make for more competitive companies.

          Let's bust them up in little pieces so they can't hold us hostage like this.

          by RustyCannon on Sun Mar 29, 2009 at 08:25:24 AM PDT

          [ Parent ]

          •  If a new version of Glass-Steagall is passed, (2+ / 0-)
            Recommended by:
            Bluedoc, RustyCannon

            AIG would of necessity have to be broken up as they are performing functions that should not be done by a single firm if these things are separated. What I am not certain is whether this would lead to an increased utilisation of labour in these various areas that are broken off, of necessity.

            There are also other ways to create longer term employment that will have more of a multiplier effect throughout the economy which is why I raised the restructuring of manufacturing and also increased transfer payments which would lead to increased demand for goods and services thereby leading to increased production and employment. We need to find ways of creating sustained employment as the ones created by most of the fiscal stimulus as it currently stands will create a short term increase in employment. The problem is that due to the decline and destruction of manufacturing the best way to do this has been compromised.

            No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

            by NY brit expat on Sun Mar 29, 2009 at 08:49:47 AM PDT

            [ Parent ]

      •  You are confusing and conflating several (2+ / 0-)
        Recommended by:
        Bluedoc, RustyCannon

        different concepts: concentration of wealth, concentration of capital, regulations, and income distribution.

        First, concentration of wealth that is the extremely unfair distribution of income and wealth has derived from several different policies in the US, which included the collapse (and deliberate destruction) of the union movement (which enabled the existence of the middle and working classes in the US and the fact that workers were able to get part of the increased growth and productivity arising in the 1950s following WWII), there was in addition, protections of income and wealth of the upper classes whose income taxes, inheritance taxes were much lower than any of their counterparts in european countries. This was deliberate following along with the neoliberalist (and supply side) economic policies that were introduced and became the dominant economic ideology.

        Second, concentration of capital refers to the fact that corporations are actually far bigger and that obviously this limits competition as entry into the industry is extremely prohibitive and corporations actually control the production of several different types of commodities.

        Regulations on banks such as Glass-Steagall kept the functions of the banks separate, specifically it limited investment and stock activities to those firms specifically geared towards them rather than allowing them to have access to all types of banking activity. It also regulated certain types of activities of banks and placed limits on the type of activities they could engage in. Anti-trust legislation is what broke up monopolies such as ATT and Standard Oil. To be honest with you writings on the era of monopoly capitalism began at the beginning of the 20th century and have provided far better understanding and discussion of the nature of the capitalist economic system than competitive models. Competition works to a far greater degree in new firms or those that actually rely upon development of new commodities and technologies (start-ups for example).

        There are many other types of regulation of business, such as ensuring that they actually disburse some of their gains as part of wages ... but that has nothing to do with the size of the firms. You need to distinguish more clearly the differences between things.

        No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

        by NY brit expat on Sun Mar 29, 2009 at 07:58:45 AM PDT

        [ Parent ]

  •  Read Woodrow Wilson's New Freedom (5+ / 0-)

    "If the government is to tell big business men how to run their business, then don't you see that big business men have to get closer to the government than they already are?  Don't you see that they must capture the government, in order not to be restrained too much by it?"

    This was in response to Teddy Roosevelt's call for more regulation.  Wilson's plan was to break up big business.  Roosevelt saw trusts as either good or bad.  Wilson saw the very existence of trusts as bad and contrary to democracy.

    Seems like Woodrow was right.

  •  Breaking them up will create many jobs. (9+ / 0-)

    Their reasons for consolidating are, among others, "economy of scale". In the real world, that means that each time they merge, they eliminate jobs and usually dump more work on the already over-worked employees who are left, degrading their lives exponentially.

    Breaking up gigantic companies will, in itself, create more jobs.

    Let's bust them up in little pieces so they can't hold us hostage like this.

    by RustyCannon on Sun Mar 29, 2009 at 06:58:59 AM PDT

    •  And get work done at higher quality. (4+ / 0-)
      Recommended by:
      Bluedoc, trinite, lightfoot, RustyCannon

      Mergers almost always decrease product quality.

      That is certainly true after airline mergers.

      BTW: AIG filed/files strange papers on deals, making each deal its own corporation.

      Banning that practice -- A.O.K.

      Glass-Steagall == Yes !! But that is not enough. We need to eliminate the bank holding company, period.

      Same for insurance holding companies.

      The financial holding company is too dangerous in the age of computers, Basil II, mangled/inept regulation, "legacy assets," and hedge funds.

      BTW: no way that the hedge fund managers don't eat/breathe/live on insider information.

      Its been that way for decades. Bribing somebody at a holding company is vastly more efficient/powerful than having to go around to smaller companies, piece meal.

      Eff' the hedge funds. They do nothing productive -- more are RICO-eligible criminal enterprises than are not.

      Droogie is as Droogie does....

      by vets74 on Sun Mar 29, 2009 at 08:09:18 AM PDT

      [ Parent ]

  •  Thank you Devilstower for stating the obvious so (3+ / 0-)

    succinctly.  You have pulled it all together to allowed the chaff to settle so that what remains is a clear and accurate synopsis of "what is wrong with this picture".

    "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

    by Bluedoc on Sun Mar 29, 2009 at 07:00:18 AM PDT

  •  The government already has these powers yet has (5+ / 0-)

    chosen NOT to use them.

    The answer is clearly NOT to give the government more powers it then choses NOT to use.

    I have a real problem yielding more power to a government that fails to use properly the power it already has at its disposal.

    What the government itself wants is broader discretion to continue to conduct nonfeasance, misfeasance, and malfeasance.

    I don't think so. And it's not like the government has suddenly woken up and discovered these businesses are "too big to fail"; hell, it actively aided in their construction as behemoths!

    I call bullshit on Geithner and all of his ilk.

    " ... or a baby's arm holding an apple!"

    by Lavocat on Sun Mar 29, 2009 at 07:01:42 AM PDT

    •  Well the first thing that needs to happen (3+ / 0-)
      Recommended by:
      JeffW, Calamity Jean, RustyCannon

      is the separation of government and corporate powers.  Only then can we distinguish in whose hands the power will be misused.

      Find your own voice--the personal is political.

      by In her own Voice on Sun Mar 29, 2009 at 07:11:07 AM PDT

      [ Parent ]

      •  I was in law school back during the M&A mania (6+ / 0-)

        I took antitrust law because it gave an amazing cultural analysis of modern-day American business law.

        After aceing the class, I told the prof that I wanted to take advanced antitrust. He told me not to waste my time, since The New World Order had deemed it unnecessary to pay any heed to antitrust law and that his area of expertise was "about to collect a lot of dust". He was dead-on correct.

        All we have to do is go back to the days of actually enforcing the antitrust laws. It really is not much more simple than that.

        And I have a real fear of vesting this non/mis/malfeasant government with yet more power when it has clearly illustrated that it is unable to properly exercise the powers it already has.

        What we still have is an imperial, unitary executive, a Congress awash in greenbacks, and a USSC that wants to return to the Gilded Age.

        Before we grant any more power to this hydra, perhaps we should demand palpable results first.

        We now own AIG: tear it apart. And use the antitrust laws to tear all the other "too big to fail" entities apart as well.

        When corporations dictate to government, instead of the reverse, you get corporate fascism; similar to what we have now.

        " ... or a baby's arm holding an apple!"

        by Lavocat on Sun Mar 29, 2009 at 07:24:57 AM PDT

        [ Parent ]

      •  Huh? (0+ / 0-)

        Okay I'm confused. Wouldn't nationalization make the government in control of corporate powers? Isn't this what people on here have been shouting about for months? I just really don't get what people want. This isn't aimed at you personally IHOV, it was just your response that triggered it.

    •  The powers need to be there (not dismantled) (1+ / 0-)
      Recommended by:
      JuliaAnn

      for when they are needed.  Bushco had no respect (and apparently not much knowledge) about the safeguards built into our form of government.  He ran roughshod over anything that got in his (Cheney's) way.

      Our government changes direction when a new President is elected...and the direction set by the Bush adm. was a steep downhill course...and the new administration is trying to avoid the ultimate crash.

      Sometimes I feel like we are like kids fighting in the back seat on a road trip when the driver is trying to navigate through dangerous traffic.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 09:19:48 AM PDT

      [ Parent ]

  •  Great reporting! (3+ / 0-)
    Recommended by:
    Bluedoc, trinite, RustyCannon

    You hit this out of the park.

  •  Audit them carefully, fine/jail them, break em up (4+ / 0-)
    Recommended by:
    Bluedoc, lightfoot, RustyCannon, whoknu

    Well said, thank you!

    Anyone seen Galbraith's latest:

    A people first strategy

    http://www.guardian.co.uk/...

    short and a good read!

    •  This is the most important paragraph (4+ / 0-)
      Recommended by:
      whataboutbob, JuliaAnn, Bluedoc, lightfoot

      We are not in a temporary economic lull, an ordinary recession, from which we will emerge to return to business-as-usual. We are at the beginning of a long, profound, painful and irreversible process of change. We need to start thinking and acting accordingly.

      I don't think I even need to add to that statement.

      Nature's laws are the invisible government of the earth - Alfred Montapert

      by whoknu on Sun Mar 29, 2009 at 07:50:18 AM PDT

      [ Parent ]

  •  Absolutely correct! (4+ / 0-)
    Recommended by:
    whataboutbob, Bluedoc, lightfoot, whoknu

    The long-term solution to "too big to fail" is to make sure that NO financial institutions will ever reach that status again -- and that those curretnly existing are broken up.

    They will whine and moan.  They will contend that "we need big institutions to have the fiscal resources to make our economy work".  BULLSHIT.  We can accomodate the needs for capital by allowing highly regulated cooperative ventures by these institutions on individual deals.  These ventures need to be translucent for all purposes -- pass-throughs to the orginal institution on taxes, and, most importantly, on liability.

    I am for the individual over government, government over big business and the environment over all -- William O. Douglas

    by Its the Supreme Court Stupid on Sun Mar 29, 2009 at 07:10:57 AM PDT

  •  yes. (6+ / 0-)

    How about making a law that says that the officers of any institution with a balance sheet of more than, say, $300 billion, will be sent to jail, starting in 2012?

    That would let the markets do the breakup, and it would work.

  •  Try this metaphor for the Randians (5+ / 0-)
    Recommended by:
    Bluedoc, rsie, jds1978, Donkey Hotey, whoknu

    They don't believe government should dictate to business, because business is quite capable of looking after itself? They don't think size is a problem?

    Okay, let's look at pro football. You see those guys with black and white striped shirts all over the place? They don't block or tackle, they don't run the ball, they neither throw or receive passes, and they don't kick the ball. But, the game would be impossible if they were not there. They enforce the rules - fairly - and keep the game within limits.

    Are they always right? No. Sometimes they make bad calls or miss things they should have seen. But getting rid of them would not make things better - and instant replay makes it possible to challenge their rulings, with a cost when the challenge fails. That helps keep both them and the teams they oversee honest.

    And, it is NOT like the football teams always execute flawlessly on every play. Sure, no one may do it better and they are highly paid pros - but balls still get dropped, plays get broken up, quarterbacks get sacked and passes get intercepted. Stuff happens.

    Teams that consistently do well make it to the playoffs. Teams that don't fire coaches, trade players, and rethink their game plans. They don't hand out bonuses anyway, or get a by in the the first round. They don't talk about the need for retention bonuses. And, even the team that goes all the way to win the Superbowl still has to start over again when  the new season starts. There are no givens, no teams "too good to fail."

    There are also things like limits: on the number of players a team can carry or put on the field, how big their payroll can be, and other things to keep the playing field roughly level. (Not to mention a player's union.)

    Here's Kauffman's Rule #25, with commentary by Sara Robinson (in italics)

    1. Competition is often cooperation in disguise. A chess player may push himself to the limit in his desire to defeat his opponent, and yet be very upset if he finds out that his opponent deliberately let him win. What appears to be a fierce competition on one level is actually part of a larger system in which both players cooperate in a ritual that gives both of them pleasure. Not "doing your best" is a violation of that cooperative agreement. Similarly, the competitions between two lawyers in a courtroom is an essential part of a larger process in which lawyers, judge, and jury cooperate in a search for just answers. Businesses cooperate to keep the economy running efficiently by competing with each other in the marketplace. Political parties cooperate in running a democracy by competing with each other at the polls. And so on.

    How do you tell cooperative competition from destructive competition? In cooperative competition, the opponents are willing to fight by the rules and accept the outcome of a fair contest, even if it goes against them.' One reason extremist or totalitarian movements are dangerous in a democracy is that they turn politics into destructive competition.

    Kauffman wrote this upwards of 30 years ago -- but was prescient about the way in which the right wing has decimated our ability to engage with the right on the same field, under the same rules, for cooperative control of our government. They took their ball, went home, and came back with guns. And, at that moment, any possibility of democracy as usual vanished.

    The Randian fixation on selfishness as a virtue and obsession with government as an evil interloper in the affairs of commerce has given us the mess we're dealing with now. The financial situation is only one aspect of larger way they've distorted our politics.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Sun Mar 29, 2009 at 07:19:09 AM PDT

  •  Thank you! (2+ / 0-)
    Recommended by:
    Bluedoc, RustyCannon

    At last someone with a voice is saying what needs to be said!!!!
    No financial institution should be so big that what it does or doesn't do destroys the world economy and allows it to force governments to do their bidding.  Is this too difficult for Summers and Geithner?  I've been shouting this for a long time, but nobody listens to me.  

  •  From your keyboard, Devilstower... (4+ / 0-)
    Recommended by:
    Bluedoc, trinite, RustyCannon, whoknu

    ...to President Obama's inbox...

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Sun Mar 29, 2009 at 07:23:38 AM PDT

  •  Update for your benefit (1+ / 0-)
    Recommended by:
    Bluedoc

    Much has been made of the alleged

    "speacial breaks instituted by then Treasury Secretary Hank Paulson, who rescinded a 1986 rule and provided an estimated $140 billion in tax breaks to grease the skids for mergers."

    While not receiving as much attention, the source of those estimates (attorneys at Jones Day) significantly -- shall we say -- amended in December its prior assessments.

    First, we do not believe Notice 2008-83 "changes" or "overrides" existing statutory law. It simply interprets it, which is the job of the Treasury and IRS.

    Second, the Notice should be viewed as just one of a series of recent IRS announcements providing clarity critical to the consolidation and recapitalization of the financial industry. Absent this clarity, the Treasury and IRS would not have been doing their job, and financial consolidation and the restoration of the industry's capital and market stability could have been hindered.

    Third, the potential "cost" of the Notice has been overstated. We earlier calculated a possible maximum "cost" from generic, industry-wide figures. Unfortunately, this "cost" has been frequently cited as authoritative, rather than extrapolative. Recent SEC filings with specific data show the likely cost of the Notice to be much smaller, and are instructive as to why this is so

    Now about those "estimates", or how to turn "$140 billion" into "not a significant tax subsidy":

    if every bank with unrecognized losses had a change of ownership, if under applicable law all of those losses were in fact "net built‑in losses," if there were no offsetting "built-in gains," and if the applicable 382 limitation would prevent, not just defer, the deduction of all such losses, then the total tax "cost" of deducting those $400 billion of losses would be approximately $140 billion. This latter number has been widely reported as authoritative, but without consideration of those very big "ifs."

    How about moving from theory to reality, as in the actual estimated purported benefit, based on real transactions?

    Here again are the authors of the original estimate:

    Perhaps the best caution on extrapolation from generic and hypothetical figures comes from reviewing the specific data filed with the SEC in the case of two pending bank acquisitions. In these two transactions, those with actual knowledge of the real figures (including the size of the built-in gains and the amount of losses deferred but not disallowed) have established that the "cost," or benefit, of Notice 2008-83 is quite modest. Thus, the benefit of Notice 2008-83 in those two cases was the clarity it brought to the tax calculations of the combined banks going forward. The benefit was not a significant tax subsidy.

    http://www.mondaq.com/...

    Tax and finance are tricky areas. It helps to check.

  •  Government Insurance (2+ / 0-)
    Recommended by:
    Bluedoc, lightfoot

    The government's antitrust operation should monitor companies companies with large market share in important markets. Mark those big enough to dominate any market whose monopolization could require antitrust to break them up. And mark those big enough that their failure could require the government to bail them out. Congress should pass laws defining those safety thresholds, or rules according to which an Executive agency can define them on an ongoing basis (as markets and their interconnections change). Then the Executive should sue in a Federal district court that governs the target company to break it up. Or the government, if it acts early enough, could stimulate competition, primarily by buying from an overwhelmed competitor, or becoming a competitor itself in some services (like utilities, finance, or personnel services like education/training).

    The public is not just the people who depend on free markets. The public is also the "insurance company" that protects the market vendors from their own failure when they're too big. The government is the ultimate buckstop for risks to the national security. Which, as everyone who watched Bill Clinton run on it knows, is primarily economic security.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Sun Mar 29, 2009 at 07:34:40 AM PDT

  •  We need another Roosevelt! (1+ / 0-)
    Recommended by:
    RustyCannon

    I was hoping we had one, but I guess I was wrong.

    •  Well first of all, no one is going to be (1+ / 0-)
      Recommended by:
      Bluedoc

      another FDR, these are different times, second of all, you should probably give him more than 2 months to make that distinction. The economic problems didn't go away 2 months after FDR was in office!

      •  FDR would never have chosen Geithner & Summers. (1+ / 0-)
        Recommended by:
        JuliaAnn

        These two were instrumental in all the deregulation.  Summers was Sec. of the Treasury when all this happened and he promoted all of Gramm's legislation.  Geithner was at his side.  People around the world all know this, but for some reason it's a secret here.  Does Obama really believe that these two men have suddenly had a reawakening and that they've forgotten all the supply side economics they believed in all their lives?  Summers was out of a job after being fired from Harvard, and he latched on to Obama for a job.  I hope you know why he was fired, so I won't bore you with the details.

        •  As I've said before...who better to help clean up (1+ / 0-)
          Recommended by:
          freakofsociety

          the mess than the ones who helped make it...especially since they are now under the spotlight with everyone watching.

          "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

          by Bluedoc on Sun Mar 29, 2009 at 09:34:24 AM PDT

          [ Parent ]

      •  Please read Krugman's March 27 column. (1+ / 0-)
        Recommended by:
        JuliaAnn
      •  Don't know where the impatience comes from... (1+ / 0-)
        Recommended by:
        freakofsociety

        with deafening silence of the last 8 years now we have a din of critics of an honest President who is trying to work for the American public.  We sound like a bunch of chickens squawking at times.

        "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

        by Bluedoc on Sun Mar 29, 2009 at 10:02:23 AM PDT

        [ Parent ]

    •  It is easy to judge when you aren't in the (1+ / 0-)
      Recommended by:
      freakofsociety

      driver's seat.  He has barely begun his term and he is making more headway than I thought humanly possible.  He SAID he would make mistakes...but the secret to success is to continue the course and correct as you go.  He is doing a great job IMHO.  Give him a chance...micromanaging from a distance contributes nothing unless you have a positive suggestion.

      "As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever." -- Clarence Darrow

      by Bluedoc on Sun Mar 29, 2009 at 09:32:39 AM PDT

      [ Parent ]

  •  So a government monopoly is ok? (0+ / 0-)

    "The administration is seeking additional power to seize firms involved in the financial problems. Which is fine --"

    Huh?  So a government monopoly over all finances is great?

    Wall Street? Is this not a mirage?  People have 401 K plans, government employees has pension plans and many more have profit sharing.  To act as if Wall Street and main street is a mirage.

    Lets get some damn honesty back. The reason we are in this mess is because we wanted to be so altruistic and give everyone a home. We bent the rules to make it possible for everyone to get a loan. The result was corruption and stupidity. We all ended up getting hurt.

    •  Banks want to be "altruistic?" (4+ / 0-)
      Recommended by:
      JuliaAnn, Bluedoc, lightfoot, RustyCannon

      You're kidding.  And as for honesty, banks don't understand that word.  We're in this mess because we deregulated everything and trashed all our anti-trust laws.  It all started with Reagan and his supply siders.  I don't think Reagan really understood economics.  He did however, understand paying taxes, and when he got to be a rich man, he didn't want to pay the high taxes of the Roosevelt years, so he became a protege of General Electric and their spokesman for the trashing of the New Deal.  They had a party to mark the death of the New Deal when Reagan became President.

    •  We elect our government (4+ / 0-)
      Recommended by:
      Subterranean, JuliaAnn, Bluedoc, lightfoot

      We don't elect the officers of the corporations. If you want to be governed by the wealthy few who run the giant corporations, and have no say in how your country runs, you have your choice of many countries around the world where you could move to and enjoy your nirvana right now, today. Try Mexico for starters.

      Let's bust them up in little pieces so they can't hold us hostage like this.

      by RustyCannon on Sun Mar 29, 2009 at 07:57:23 AM PDT

      [ Parent ]

    •  Having competing governments (1+ / 0-)
      Recommended by:
      Bluedoc

      would only lead to turf wars.

      When the US nationalizes banks, etc., we have a history of doing it temporarily to shore up our common economy.

      FDR nationalized banks during the early years of the New Deal and when those banks were again healthy, they were sold off to private investors.

      We nationalized some Savings and Loans after Reagan's deregulation of them lead to a melt down in the 80's where the taxpayers had to step in and bail them out. The feds nursed them back to health, made a profit for the taxpayers and then sold them off to private investors again.

      A stable economy is one of the most important reasons for having a government. It is the reason that the dollar in your pocket will be worth pretty close to a dollar tomorrow.

      Now do some reading on these topics and report your new knowledge back to your playmates over at FreeRepublik.

      Let's bust them up in little pieces so they can't hold us hostage like this.

      by RustyCannon on Sun Mar 29, 2009 at 08:55:00 AM PDT

      [ Parent ]

    •  Government "monopoly" is fine in a democracy (0+ / 0-)

      because the government is "regulated" by the people.  The government is the ultimate expression of the will of the people, or at least it should be.  

      If government cannot regulate corporations, then the people are being ruled by entities which they do not control.  That is tyranny.

      Put that in your pipe and smoke it, "myfreedomfirst".

      "When I was an alien, cultures weren't opinions" ~ Kurt Cobain, Territorial Pissings

      by Subterranean on Sun Mar 29, 2009 at 11:25:35 AM PDT

      [ Parent ]

  •  We should also break up the oil companies. (4+ / 0-)

    The mergers of the Clinton years were not a good thing.  The financial giants and oil giants run the world.

  •  New Capital, New Banks (2+ / 0-)
    Recommended by:
    scorpiorising, Bluedoc

    If the concern is lending, the money should go to new banks that are able to lend without toxic assets messing with the program. We may need to help some of the older banks, but that needs to be separate.

    As for other financial institutions, AIG for example, is many insurance companies that are all legally separate. Selling off pieces of AIG would be easy.

    •  The problem with that (1+ / 0-)
      Recommended by:
      Bluedoc

      is that it would introduce government competition into the market place that would unfairly target banks that are doing ok balance sheet wise.  The smaller banks do the heavy lifting in the economy but are unable to do what is needed because the money center banks are unable/unwilling to provide them the capital to get things done.  The government is trying to get that moving by supporting the large banks.  To compete with smaller banks now would be death for them.  They are all incredibly intertwined in the banking world.

      Nature's laws are the invisible government of the earth - Alfred Montapert

      by whoknu on Sun Mar 29, 2009 at 08:00:59 AM PDT

      [ Parent ]

  •  There are two underlying principles in (3+ / 0-)
    Recommended by:
    JuliaAnn, trinite, lightfoot

    evidence here.  The first is that, despite all the verbal support for competition, American industry and commerce has always aimed for monopoly situations.  Indeed, by the simple process of redefining competition as a contest, the object of competition is for one to wipe all the others out--i.e. "level the playing field" means kill off the other claimants.
    The second is related to the belief that there's an inherent right to private property and any challenge to the exercise of that right (including the destruction of the property if that's what's desired) has to be "purchased" by the public with some compensatory benefit.  
    This is how the deregulation of commerce was effectively achieved by removing the monopoly conditions with which the regulations had been justified.

    A similar strategy is now surfacing in the cap and trade discussions.  Instead of just ordering the cessation of the dumping of pollutants into air and water, utilities are looking to be bribed with special advantages under "cap and trade."  Why would we let a plant that pollutes less sell its compliance to let another plant pollute more?
    Yes, there's lots of precedent in the environmental regulation regimes.  But we should have learned from the fact that our environmental assets are still being polluted and depleted.

    How would I address it?  I'd start with the argument that the right to private property and enjoy its exclusive use comes with an obligation to not only compensate the affected population with an alternative strategy to acquire sustenance (jobs) but also to return the property to its "natural" state and public ownership when it's no longer in use.  Otherwise, the ownership of property constitutes a free lunch for which those who are excluded have to work.

    How do you tell a predator from a protector? The predator will eat you sooner rather than later.

    by hannah on Sun Mar 29, 2009 at 07:55:23 AM PDT

  •  HOW MUCH PER Person, Per Worker, Per Taxpayer (0+ / 0-)

    should be a instantly available piece of info on all this bullshit -

    AIG Bailout -
    So much per person
    so much per taxpayer

    PLUS
    CITI Bailout -

    ...

    = PROOF that ALL the savings of economies of scale disappeared AND cost us individuals MORE than we ever fucking saved.

    Same with GM bailouts - nevermind all the lost wages cuz there is no labor market competition.

    ugh.

    rmm.

    Yond Cassius has a lean and hungry look; He thinks too much: such men are dangerous

    by seabos84 on Sun Mar 29, 2009 at 08:07:58 AM PDT

    •  I've seen $40,000 per tax household. (1+ / 0-)
      Recommended by:
      seabos84

      Not sure how much of the total that represents.

      Gee.

      I.

      Just.

      Bought.

      A.

      Beemer 3.

      And I didn't get the car. The payments, yessiree....

      Droogie is as Droogie does....

      by vets74 on Sun Mar 29, 2009 at 08:11:40 AM PDT

      [ Parent ]

      •  Meanwhile, FOLLOW THE MONEY ::: (2+ / 0-)
        Recommended by:
        JuliaAnn, Bluedoc

        From The Atlantic:

        Not surprisingly, Wall Street ran with these opportunities (to use free money.)

        -- From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits.

        -- In 1986, that figure reached 19 percent.

        -- In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period.

        -- This decade, it reached 41 percent.

        -- Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

        Executive compensation =EQ= The Only Motive.

        Droogie is as Droogie does....

        by vets74 on Sun Mar 29, 2009 at 08:25:37 AM PDT

        [ Parent ]

        •  EXEC Thieves, WHERE are Medians? Average (2+ / 0-)
          Recommended by:
          JuliaAnn, Bluedoc

          doesn't tell us shit.

          If I hire 49 people at $10 bucks an hour and pay myself $510 an hour, I can tell people the average pay is

          (490+510)/50 = $20 bucks an hour!

          we need the medians.

          rmm.

          Yond Cassius has a lean and hungry look; He thinks too much: such men are dangerous

          by seabos84 on Sun Mar 29, 2009 at 08:33:46 AM PDT

          [ Parent ]

  •  Sanator Sanders said: "If it's too big to fail, (6+ / 0-)

    then it's too big to exist."

    Break them up!

  •  Paulson did not "rescind" the tax law. (3+ / 0-)
    Recommended by:
    Devilstower, Bluedoc, science first
    "Hank Paulson, who rescinded a 1986 rule and provided an estimated $140 billion in tax breaks to grease the skids for mergers."

      The tax law still exists.  What the IRS did was
    "reinterpret" it as it applies to certain banks in certain circumstances (which just happen to apply to said mergers.)
      Please get the facts straight or leave the tax analysis to those of us experienced in that area -  http://www.dailykos.com/...

    My Karma just ran over your Dogma

    by FoundingFatherDAR on Sun Mar 29, 2009 at 08:27:41 AM PDT

  •  Why won't anybody say this? (0+ / 0-)

    Capitalism itself is the problem here. The system naturally gravitates towards monopolies and oligopolies. In order to have a stable system we must rethink the way capitalism works. It must include natural stops and some form of natural breakup if we are to avoid the 'too big to fail' scenario again. I don't see how capitalism in its current form can stay stable.

  •  Very naive analysis (1+ / 0-)
    Recommended by:
    Bluedoc

    Perhaps this all works for institutions providing financial services to the U.S. consumer.  But our banks compete globally these days - for the business of global consumers and multinational corporations.  And they compete against global behomoths from Japan, France and Germany to name a few.  Do you really want to neuter our banks?  Or do you think you can implement these changes globally?  

    For about 70 years - since the '33 and '34 acts - our financial system was second to none globally.  We certainly need new regulations - and reinstating Glass Steagal is probably a good place to start.  But do we really want to get rid of the whole baby with the bathwater?

    •  Do I want to "neuter" our banks? (3+ / 0-)
      Recommended by:
      JuliaAnn, Bluedoc, In her own Voice

      In a word, yes.

      It's all in what it is we want from banks. The Renaissance was made possible to some extent by the availability to cash to drive experimentation. There's no doubt that a flexible credit system is necessary to drive a vibrant economy, and will be unless we wander into some kind of cash free utopia (or dystopia).

      However, banks exist to serve the system. They are not the system. I don't see any evidence that larger banks present more benefits than risks.

    •  I don't think many people are thinking on those (1+ / 0-)
      Recommended by:
      Bluedoc

      lines at all. They still see America in isolationsism, as a self sufficient self sustaining economy rather than a component of the global economy.

      Banks are still to many people just the friendly local branch of a behemoth or the local community bank or credit union there only to handle their deposits, insure they never lose them, a     sort of personal ATM.

      The role of the giant investement banks changed drastically during the past decade.  Bush's 'owwnership' society contributed hugely to everyone wanting to get in on the easy money, buy now, pay later go go go mentality that prevailed.

      America is going to have to change drastically if it wishes to retain equality in the global markets of today, and that has to include providing the same kind of social safety nets that are cushioning European nations in the recession.

    •  I say we should neuter the banks (0+ / 0-)

      and stuff their pie-holes with their balls.

      "When I was an alien, cultures weren't opinions" ~ Kurt Cobain, Territorial Pissings

      by Subterranean on Sun Mar 29, 2009 at 11:22:32 AM PDT

      [ Parent ]

  •  This issue trumps all others right now. (2+ / 0-)
    Recommended by:
    JuliaAnn, Bluedoc

    It would be great to see the KOS people really keep tabs on this one. This, and campaign finance reform. We will get nothing done unless Congress represents the people.

  •  Excellent article similar lines at Atlantic: (1+ / 0-)
    Recommended by:
    Bluedoc

    "Don't let your mouth get your ass in trouble." Shaft 1971

    by gereiztkind on Sun Mar 29, 2009 at 09:03:26 AM PDT

  •  "Blue horeshoe loves Bernie Madoff schemes" (1+ / 0-)
    Recommended by:
    Bluedoc

    Wall Street likes unfettered access to scams like Milken, Boesky of Reagan I's day to Maddoff and Stanford of Reagan III's day. Wall Street makes money on the scams. Wall Street doesn't make money or regular business.

    Biggest US industrial and GDP growth occurred from 1945 to 1985 and stock market was relatively flat. As market took off in mid-1980's as Reagan deregulation kicked in, US GDP and industrial growth slowed as the market preyed on US economic base.

    So when market goes up, historically it is bad for US economy.

  •  "Chop 'em up".... A f*cking men... eom (1+ / 0-)
    Recommended by:
    Bluedoc

    When the most virulent extremism attacks our country, it won't be shrouded in Islamic fatwas -- it will be wrapped in a flag and carrying a cross.

    by Kairos on Sun Mar 29, 2009 at 09:36:57 AM PDT

  •  Around the rest of the world the meme seems to be (1+ / 0-)
    Recommended by:
    Bluedoc

    is America to small to suceed?

    This article on the mood of various national leaders Obama will be facing at the G20 summit, a subject that seems to be receiving scant attention in America, indicates that a great deal of America's leverage has dissipated.

    http://www.nytimes.com/...

    of course that might not be a bad thing!

  •  Bottom line, the solution is NOT... (0+ / 0-)

    ...delegating unbridled discretion to the Executive. The solution is Congress passing rules and regulations, that can be publicly observed and weighed.

    And even if you trust Tim G., remember, the power we (through Congress) give to one person (in the Executive) today is power some completely different person will have, tomorrow.

    (I understand that rules and regulations may not adequately react with enough haste to deal with certain volatile situations; if he needs such discretion, it needs adequate strings. For instance, such power to create rules may be on a temporary rule-making basis, e.g. a rule lasts for, maximum, one year, until it must be ratified by the House of Representatives, etc.)

  •  Too big? (0+ / 0-)

    Whatever happened to "anti-trust" laws.  No one mentions them.  When the Seven Sisters (oil companies) have become less, when almost every large industry has gobbled up its competitors (see the aerospace industry), where were the pesky anti-trust laws?  I guess nobody really cares any more, and the words are "passee".  The Big Guys have won because no one will mention those words "anti-trust".  By all right Standar Oil was too big to fail, right?

  •  I've thinking of it lately as: (0+ / 0-)

    Government must regulate corporations, or corporations will regulate government.

    "When I was an alien, cultures weren't opinions" ~ Kurt Cobain, Territorial Pissings

    by Subterranean on Sun Mar 29, 2009 at 11:19:39 AM PDT

  •  We must save Smaller banks, let big banks fail (1+ / 0-)
    Recommended by:
    Eloise

    i truly enjoyed the story the other day on NPR where they chronicled the FDIC taking over a failed small bank. But what truly frightens me is that it's the Big banks that are causing us the most grief right now. Wouldn't it be cheaper to bail out the smaller banks and let the big banks fail? For truly the lesson we should be learning is that "too ...  Read Morebig to fail" means "too big of a risk for the government and the people." i doubt obama's crack team of investment gurus recognizes this, because they seem hell-bent on propping up shitty big banks rather than forcing them to eat up the bad risk they chose to take on due to their greed. as a taxpayer, i'm opposed to paying for someone else's failure to be properly capitalized -- it's not as if they would share their windfall profits with us, would they?

    "Procrastination is the thief of time." -- MLK jr.

    by jsepeta on Sun Mar 29, 2009 at 01:26:59 PM PDT

  •  I'll just keep asking: (0+ / 0-)

    What's the advantage for me and Mrs. SixPack having any business to big to fail?

    Beer, politics & pizza - must have died and gone to heaven.

    by mrgardon on Sun Mar 29, 2009 at 01:28:57 PM PDT

  •  Whatever those are... (0+ / 0-)

    Julienne is a food preparation in which state a food item is cut into long thin strips.

    Those who do not study history should not be permitted to make it.

    by trumpeter on Mon Mar 30, 2009 at 04:37:00 PM PDT

  •  Somehow the words of Grover Norquist fit here: (0+ / 0-)

    He said:

    "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub."

    Let me tell you, I want to see a lot of businesses reduced to a size where we can drown, throttle, step on or otherwise keep in control. My choices:

    1. Exxon Mobile
    1. Wal*Mart
    1. Shell
    1. BP
    1. Chevron

    etc.

    See, of the largest five still alive, the second largest sells the plastic goodies produced by the other four.

    http://www.marketsharematrix.org/

    Remember in "The Graduate", where the guy said the future was in "plastics"? Here we are drowning in oil and plastics...

    Ugh. --UB.

  •  hear, hear, devilstower. hard to shorten (0+ / 0-)

    that handle you've got there (you devil).

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site