Dedicated to the writings of Saint Luke.

Thursday, September 25, 2008

Meltdown, subprime and other stories from our youth

Our grandparents told us stories and we said thank God we will never have another depression. We said that because our teachers taught us that the New Deal legislation was designed with one goal in mind: to prevent another depression. Today, we discuss New Deal legislation individually forgetting the one overriding concern that compelled enactment of the entire package. After discussing the faults of each piece of the package, we modified and repealed New Deal Legislation until we created an economic mess. Have we heard anyone say that the repeal of The Glass-Steagall Act of 1933 was a mistake? It was designed in part to control ruinous speculation and to ensure no entity would become too big by mergers and other questionable means to fail.

The Savings and Loan crisis happened as we sought ways to make more money than mere passbook savings. We have not learned any lessons about how our appetite for more unearned income has created subprimes to satisfy our greed. Is that not the real meaning of the crafty steward? He wanted more unearned interest, more than what he needed or deserved.

Bailouts without reforms designed to provide transparency and control ruinous speculation are not solutions. They merely buy time.

Copyrighted 2008


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