Just as I have been saying all along, this current economic mess in which we find ourselves lies at the feet of Bill Clinton. While I have known this for some time from evidence found through various sources, the fact was driven home last night on a television special. Was it on Fox News? Far from it. It was on the PBS show, "Frontline." Long story short is that the deregulation of the financial industry under Clinton and his Treasury Secretary, Robert Rubin, along with their complete refusal to even acknowledge the possibility of a financial meltdown through the unregulated over the counter derivatives markets caused this entire situation.
Despite a major lawsuit by Proctor & Gamble over a derivatives investment scandal in 1994, Clinton and Rubin looked the other way with full knowledge of the fact that the scandal was the tip of the iceberg. In 1998, the new chairperson of the Commodity Futures Trading Commission (CFTC), Brooksley Born, brought to the attention of Congress as well as Rubin and Clinton the growing investment by banks in the unregulated over the counter derivatives markets. Rubin and Clinton resoundingly rejected Born's proposal for regulating derivatives despite yet another derivatives scandal of billions of dollars at Long Term Capital Management (LTCM.)
When Clinton repealed the Glass-Steagall Act, which then allowed investment banks to merge with commercial banks, the final piece of the puzzle was in place as normally conservative investing banks could then invest heavily in over the counter derivatives markets, much of which was in the form of speculative credit derivatives closely tied to real estate. Much of that real estate had been financed with sub-prime financing with borrowers who could barely buy a doughnut, let alone a house. Thank Barney Frank, D-MA, for this trend.
Once so many bad borrowers had their rates adjusted, the house of cards started to come tumbling down. The default rate started to grow rapidly while many derivatives sold to banks and large institutional investors were based on credit derivatives, basically betting that people and companies would not default on their mortgages. There was little or nothing that George W. Bush could have done as the pieces were already in place for this catastrophe.
Perhaps the severity could have been mitigated somewhat, but the bullet had left the gun long before and there was no bringing it back. How does one "undo" the unregulated, highly speculative investment of hundreds of trillions of dollars by the largest banks and investment banks in the world? The fact is that had Clinton and Rubin simply looked at what was going on and listened to those trying to prevent this disaster, we would be in a far better situation.
You may ask what happened to those in the Treasury who sat by while this happened. Robert Rubin only recently left Citibank after pocketing an estimated $40,000,000 during his time there. Tim Geither, the #3 man at the Treasury while this was going on, is now our illustrious, tax-evading Treasury Secretary. The #2 man under Rubin, Larry Summers, is now serving as the Chief Economic Advisor to Barack Obama. The prisoners are definitely running the jail. Oh, did I mention that Clinton was also given the precise location of Osama bin Laden while military personnel were waiting to launch missiles into that location? He could not be bothered during his fund-raising event as written about by his Nation Security Advisor, Sandy Berger. He failed to do anything to prevent the biggest disasters of the last 80 years. Is there any other way to see it?
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Mr. Walker makes some good points, but with all due respect, "We the People" are responsible for our current mess: not Clinton, Bush, Obama or any number of corrupt Senators and Congressmen. Tens of millions of Americans voted for these people, putting them in a position to bankrupt the country. Like it or not, many, if not most, voters pay scant attention to what actually goes on in the halls of power after an election, and they are gullible enough to believe the campaign promises of often self-serving, dishonest, and unprincipled politicians. Does anyone remember: "Read my lips, no new taxes," "the era of Big Government is over,"the "Contract with America," no more "nation-building," the "most ethical Congress in history," or "Hope and Change"?
In most elections, the largely uninformed electorate sends upwards of 75% of incumbents back to Washington D.C. and their respective state capitals. You want change? How about not sending the same people back into office every few years to "fix" the very problems that they themselves created?
This year and in the future, in the absence of principled constitutionalists (sometimes called "libertarians") on the ballot for whom I may actually want to vote, I'll be following the advice a wise older man once gave me by voting against the incumbents, regardless of party. Right or Left, Conservative or Liberal, people who want to leave us alone don't generally run for office. Most just want our money, and they want more power and perks for themselves. Republicans, in general, are no more serious about limited government than Democrats; they just want to spend our money on different things. (See: Republican Congress '95-'07, G.W. Bush '01-'09)
It is said that power corrupts. That's often true, but remember that any power an elected official wields is in fact the people's power; we just loan it to them. Don't let them hold onto it for too long or "We the People" may not get it back.
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Mess? Which one? What part of the economy has deregulation not affected? The Democrats pushing deregulation? Surely you jest.
The Republicans were in control of both the U.S. House of Representatives and the U.S. Senate during the period covered on the Frontline segment on the financial meltdown. The Frontline segment I watched on PBS concerning the financial meltdown showed Sen. Phil Gramm (Republican) from Texas calling the Federal Trade Commissioners claim "absurd" that the valuation of derivatives were too complicated and risky.
If we are going to use deregulation as a point to lay blame, then it would definitely go to President Reagan. All governmental regulations have been rolled back since the Reagan Administration, and now we the people are getting the full effects of the foxes running the hen house for the past 30 years. Of course, this has all been brought on by "conservative" laissez-faire politics.
I ask you: when it comes to protecting your financial nest egg from predatory financial wizards do you want more or less protection? Hey, I've got another "conservative" idea. Let's try something we know hasn't worked 100 other times, but lets try it one more time because I think its going to work this time.
Stephen Durham (firstname.lastname@example.org)
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Can Republicans please stop blaming Clinton? He's not the president anymore. Also, can Democrats stop blaming Bush? Last time I checked he wasn't not the president anymore either. Can you people just move on?
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Unfortunately the neo-liberals bought into Reagan's voodoo economics. Thirty years of disastrous deregulation and fetish of putting Wall Street before Main Street have brought this country to its knees,
and both corporate parties are at fault.
We need to separate regular banks from investment banks. It was no accident that we didn't have major bank failures between FDR to
Reagan. Once Reagan got in we had the Savings & Loan debacle. And let us not forget BCCI.
We need more populist on the left and right involved in politics.
Green Party Member