Posts Tagged ‘Banking regulations’
Fraud in the USA

Alan Greenspan, Former Chairman of the Federal Reserve on the need to enforce the existing laws against fraud.

William Black points out  97% of the loans Country Wide provided to it were sold under false reps and warranties. If time pressed then listen from the 11.15 mark. It’s less than two minutes. You will then want to listen to the rest.

Black is something of an expert on the subject. Wikipedia summarises his Bill Moyers Journal interview:

“On April 3, 2009 Black appeared on Bill Moyers Journal on PBS and provided critical commentary on the U.S. banking crisis.[6] In the interview with Bill Moyers,[7] Black asserted that the banking crisis in the United States that started in late 2008 is essentially a big Ponzi scheme; that the “liar loans” and other financial tricks were essentially illegal frauds; and that the triple-A ratings given to these loans was part of a criminal cover-up. He said that the “Prompt Corrective Action Law” passed after the Savings and loan crisis mandated that ailing banks should be put into receivership. Black also stated that trying to hide how bad the situation is will simply prolong the problem, as happened in Japan’s lost decade. Black stated that Timothy Geithner is engaged in a cover-up, and that the administration does not want people to understand what went wrong or how bad the banking situation is today”.

Let no one doubt the US is eating its cultural seed corn.  There will be hell to pay, and rightly so.

 
USA destroying cultural intangibles

The fault at the heart of the MBS security market is further evidence that the US is in the process of destroying the cultural intangible capital that enabled them to grow wealthy. Gone are accounting standards, the rule of law and the certainty of property title. What next?

Lee Kuan Yew’s comment applies to more than Singapore:

“If you forget that this is a small island which we are built upon and reach a 100 storeys high tower block and may go up to 150 if you are wise. But if you believe that it’s permanent, it will come tumbling down and you will never get a second chance.”

But the rules Singapore put into place will last as long people remember the rioting that resulted in the creation of Singapore. Once they forget why things are the way they are, they will change them. Just as the US and UK changed banking regulations put into place after the Great Depression. Allowing banks to again unleash a credit boom with a resultant bust that they are now trying to stop, by borrowing more! Eventually they will put restrictions on their banks that will last until people have forgotten the Greatest Depression.

That’s assuming the US and UK survive the readjustment in their current state. What was once united can be divided.

UPDATE

See Destroying Cultural Capital for a more profound look at the issue of the destruction of societies cultural intangibles