Published on Global Research.ca, by Washington’s Blog, January 13, 2010.
As everyone knows, the economy cannot permanently recover and truly stabilize until the giant banks are broken up. The top independent experts agree that the “too big to fails” are a drain on the economy and put the entire system at risk.
The giant banks aren’t lending much to the people who need it. Fortune pointed out in February that smaller banks are stepping in to fill the lending void left by the giant banks’ current hesitancy to make loans. Indeed, the article points out that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition … //
… We’ll Have to Do It Ourselves:
If the government isn’t doing anything to fix this dangerous situation, we’ll have to do it ourselves.
As a start, if Congress won’t reimplement the Glass-Steagall Act (the Depression-era law which previously separated depository functions from speculative investing), let’s manually separate these two types of businesses.
Simple: let’s pull our money out of the too big to fails and put it into small community banks and credit unions.
The giant banks may still make bucketloads of cash on their casino style speculative gambling (for now, at least), but after we’ve moved our deposits to more responsible, smaller banks which don’t gamble as much, then we will have manually separated depository banking functions from the giant banks’ speculative investing.
The government isn’t doing the job and fixing the problems which have led to the economic crisis … so we’ll have to do it ourselves. (full text).
(Note: Some people say that moving our money out of the too big to fails will just mean that the government will give them more bailouts. But this misses 3 points:
- 1. If the deposits are withdrawn, the giant banks will only be speculative gamblers, and at least our deposits will be safe and won’t be mixed with their toxic assets
- 2. The giant banks and their enablers in Washington will look even worse if they are bailing out companies that are solely and obviously gambling casinos
- 3. The head of the International Monetary Fund, Dominique Strauss-Kahn, has warned:
- The public will not bail out the financial services sector for a second time if another global crisis blows up in four or five years time, the managing-director of the International Monetary Fund warned this morning.
- Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.
- “Most advanced economies will not accept any more [bailouts]…The political reaction will be very strong, putting some democracies at risk,” he told delegates.
In other words, the government – fearing revolt – might be more hesitant to give another round of bailouts than people assume.
I’m not looking at this with rose-colored glasses, and I realize that the TBTFs will act like the kid who killed his parents and then cries for pity since he’s an orphan.
But I think that if the government is not doing its job, we should do it ourselves, and that a focused gesture of taking things into our own hands can only help.
Washington’s Blog is a frequent contributor to Global Research. Global Research Articles by Washington’s Blog).