Today many Americans, have placed their faith on the alter of obtaining material wealth. Their God is money, and their blind faith is the prospect that big business and free enterprise will give them success and money beyond their wildest dreams. Their opiate is deregulation and privatization.
The question we face as a society is whether or not the result is one worth having, in this new world of economic globalization?
A positive aspect of this new economic order is the prosperity and the rising middle classes in emerging economies that have come about as a result of the new economic order.
With success, new problems have arisen that need to be addressed to see if the promise of gold at end of the rainbow was worth the negatives that we now face.
Cheap labor has led to problems in the more highly developed countries that have led to higher unemployment and a greater disparity in wages in countries such as England and America.
The increased financialization of the economies of England and America and the decrease of manufacturing have left their economies vulnerable to a higher wage disparity and to a reduction of the overall standard of living.
Although the corporate world of Wall Street sees record profits and a record S&P in the stock market, average Americans have not seen the improved economy trickle down to increased wages and jobs.
The prospect of another financial debacle still looms as sufficient reforms have not been enacted nor have they been implemented.
Reforms such as the Volcker rule have not been written nor implemented. Wall Street has been successful in stopping reforms to all of our detriment.
Banks are even bigger and more powerful than they were before the crash of 2008. If the banks were too big too fail then, than they must be too big to fail now.
The insanity continues where Wall Street is even more powerful and Main Street is weaker, still.
The danger is that the next time Wall Street collapses we may not be able to put Humpty Dumbty back together again.
The Volcker rule or a return to Glass-Steagall would be a good place to start. The Volcker rule would separate government insured traditional commercial banking and lending, from the risk reward practices where banks can make so much money in.
Just this past year we have seen two situations where bad habits reared their ugly heads in the world of high finance and high risk to al of us.
Chase lost 7 billion in the london Whale fiasco and some banks attempted to rig the Libor interest rate.
We are living in an era where financial institutions are playing with money fast and loose.
Warren Buffet calls the use of derivatives, weapons of mass financial destruction and they are. Derivatives, if you can understand what they are, should be illegal. It is gambling really and you can lose money in the billions in mere seconds. But what is a billion these days, eh?
If you could limit the leverage that banks can make to a more safe range, that would be a step forward in making our financial system more safe.
I miss the days when a local bank was like the savings and loan in a Jimmy Stewart movie. An institution like a bank should be an intergral part of the community, helping people start a business or buy a home.
Deregulation is not the answer, we need to moniter bankers like a hawk. Greed breeds more greed and puts all of our lives in financial jeopardy. Crimes committed by bankers that ruin peoples lives should not be allowed to get a pass on by just assessing them with a fine.
Hard jail time must be required and someone put in jail for their fraulent actions to discourage anyone one else from enacting another Ponzi scheme.
Reducing the size of banks has been recommended as well as having the likes of a return to the Reconstruction Finance Corporation.
The Reconstruction Finance Corporation was an institution started by Herbert Hoover but streamlined and improved by Franklin Roosevelt. It received money directly from the Treasury and lent it to small businesses, and small farms, as well as saving homes from foreclosure during the Great Depression.
Something like the Reconstruction Finance Corporation is needed today as a bank of last resort.
Banks either go crazy with risk or they decide that they do not want to loan money to anyone no matter how good your credit is. So we need a bank of last resort.
Bank speculation has been the cause of most of this nation’s Depressions. Bernie Madoff went to jail alright, but that was clearly because he ripped off the wealthy.
Shadow banking is another area that needs reform. Let us limit risky trading or at least make sure that financial dealings see the light of day. Banks have been even known to lie about these things, and lie about their financial dealings. Punishment should fit the crime. If you ruin peoples lives you should pay the consequences. One can almost understand now why John Dillinger was such a folk hero.
The question comes to mind as to what have we learned if anything from the greed displayed before the Great Depression and before the Great Recession? John Stuart Mills once said,” No great improvements in the lot of mankind are possible, until a great change takes place in the fundamental constitution of their modes of thought.”
And in this thought we must look at what has happened with a moral view of what is right and what is wrong. It might seem quite natural that these acts of criminal behavior and fraud should re-occur or that greed should rule man’s behavior.
But that should not mean that we look away or deregulate to make it easier for the next Ponzi. Franklin Roosevelt saved capitalism from itself by regulation greed and having laws to punish those who would steal from our futures.
Let us return to the day when capitalism provided opportunity for all of us to reach our potential, but let us realize the necessity to regulate bad behavior.
The cross of gold may have people praying to it, hoping to be the next one to strike it rich. Let’s be real though, most people never reach the end of the rainbow. We should all have the opportunity to do so. It is time to make our lives safer from those who would sacrifice our financial well being for the selfish needs of a few individuals who would do anything to be wealthy. After all, if you are wealthy, how wealthy do you need to be?