Why America's Financial Future is Still at Stake

Glass-Steagall served as the basic financial "rules" of the American economic system from 1933 and is 36 pages long. By comparison, the "repair" after the 2008-2009 "financial collapse" (known as "Dodd-Frank") is around 850 pages. What's the difference? Oh, grasshopper, you must understand that it takes a LOT more pages to build in all the lucrative loopholes for your buddies!


In 1999 (see "The Long Demise of Glass-Steagall") after "12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic."


Simply put (remember "k-i-s-s"? keep it simply stupid principle?), Glass-Steagall clearly separated "banking" from "financial speculation" with a simple set of rules that effectively said "if you want federal deposit protection" (the F.D.I.C) then you must operate within a prescribed set of financial boundaries. Conversely, if you want to engage in speculative on financial instruments, then there are a different set of rules and you are "playing with your own money" (in other words, the "worth" of the corporation engaging in those riskier endeavors).


Whereas purely financial transactions had previously represented 6- to 10-percent of America's gross domestic product ("G.D.P") the demise of Glass-Steagall and the creation of all of the "financial instruments" (betting against each other with guarantees from the U.S. Government, essentially) rose to approximately 40% of the GDP by 2008. This should have been a clarion call that instead of factories and enterprises producing REAL things (cars, TVs, furniture, groceries) the financial contagion (and all of the attendant motivation to move real manufacturing off to cheaper off-shore producers) was truly upon us. I recall going through fairly "up-scale" clothiers in nice shopping malls in 2000 and 2001 and looking carefully at the "made in" labels on clothing and publicly lamenting "remember when the U.S. had actual clothing makers?" to surprised salespeople who typically reacted with "gee, I never really noticed those labels". Little did I know that the off-shore-ization" was in full swing.


I'm not a financial wizard, just a humble computer developer (turned composer) who tries to stay in touch with current events. My "wake up call" regarding understanding how the financial politics of America are rigged (yes, rigged!) came from a one-two punch in two interviews on the new "Moyers and Friends" PBS series (there's a direct link to program 2 here if you missed it). On it, in a relatively lengthy conversation with former Reagan Budget Director (and one-time financial whiz-kid) David Stockman followed by further examination with a long-time New York Times financial columnist (Gretchen Morgenstern), it is clear that nothing short of a Constitutional Amendment can separate the money interest from our REPRESENTATION in Washington. The revolving door of political figures and lobbyists guarantee that the 1% will continue to dominate the financial future and all the rest of us (the 99%) are just pawns in their continuing financial chess game.