America: Get Your Financial Act Together

America must smarten up. The global economy has crashed and the cause must be determined to prevent another. My concern is that the big problem facing the world's leaders, who are trying to fix the global economy, will be America's denial of its responsibility for this mess and its resistance to submitting to supranational institutions, solutions or oversight.

Such American policy isolationism could sink the planetary ship. It's obvious that the biggest misdeeds were perpetrated by American financial institutions worldwide. This makes arguments by Americans, that they don't want international regulatory oversight, is the financial equivalent of Iran's isolationism.

Put another way, it would be as irrational to allow the Ayatollahs to build bombs as it would be to allow Wall Streeters, hedge funds and rogue insurance underwriters to run amok again building their weapons of financial mass destruction.

The fact is the catastrophe is mostly America's fault and here's why:

 Successive American regimes allowed the Federal Reserve Bank to print money without responsible controls.
 This currency debasement was camouflaged because China, Saudi Arabia and Asian export nations bought massive amounts of T-bills. They did so to artificially reduce the value of their currencies in order to cheat trade-wise and sell more oil, cars and manufactured goods.
 Washington's Treasury Department turned a blind eye to this currency manipulation cheating even though it has the power to impose tariffs against countries who do this. Washington was co-opted and allowed its dollar to be higher than it deserved to be and others to be too low.
 The U.S.-controlled International Monetary Fund also reneged on its responsibility to watch currency cheating and, instead, morphed into a slush fund for infrastructure projects in poor countries.
 Washington made matters worse by encouraging the over-leveraging, or weakening, of the American economy. Policies promoted borrowing and credit, in large measure through gigantic, regressive entitlements for rich people or homeowners such as unlimited mortgage interest deductions against taxes.
 These incentives, easy credit and soaring money supply policies fostered the tech and real estate bubbles.
 America also failed to be prudent and ran huge fiscal and trade deficits financed by foreigners. It did not encourage savings rates, in order to meet its looming demographic time-bomb of pension and senior healthcare liabilities.
 American mortgage and banking regulation was an oxymoron. Fraudsters, mafias, terrorists were easily able to defraud borrowers and lenders. These bad debts were packaged, fraudulently re-rated and exported around the world by Wall Street, bundled along with good debts.
 American insurance and securities regulation was also an oxymoron. There wasn't enough regulation, nor was there sufficient money to support sophisticated or streetsmart regulatory bodies. The result was the credit default swap tsunami which capsized Wall Street, AIG and the globe. There is no excuse for this, given that these swaps were merely gigantic insurance policies issued by public companies which knew that insurance and financial products must have sufficient capital and assets to cover claims. Their managers and boards turned a blind eye.
 America's financial institution boards of directors, shareholder activists and other watchdogs did not do their jobs.

Of course, the U.S. isn't the only culprit, but it's by far the biggest.

That's why the world must push back vigorously against any American resistance to supranational regulations and reforms. Every economy in the world must sign a non-proliferation treaty and submit to policing to avoid the financial skullduggery that has brought the world to its knees.

-- today's Financial/National Post Diane Francis blog

Comments

[PacificGatePost]

TAKE BACK CONTROL OF MONEY

The American economy rests on the back of the American worker and consumer. Taxpayers own the government and currency is only a tool enabling commerce.

Take charge of it. Get it working for you, not against you.

http://pacificgatepost.blogspot.com/2008/12/revising-government-relationship-to.html

Once this is done, the other problems will at least begin to resolve naturally, including home owners making their mortgage payments.

[DevHyfes]

This is silly. For years, non-American entities tut-tut about our policiesand then invest heavily in our economy. Surprise, when the economy in the US has problems, these other entities are burned.

Listen up:
If you don't agree with a (relatively) free market economy, then shut down your borders, regulate yourself and keep your money out of the more risky (and therefore more volatile and perhaps rewarding) markets in the United States.

Strangely, the US economy- while battered- seems to be doing better than these other countries with far more regulation and controls. Why is that? Is that the US's fault as well?

[Henry]

"The U.S.-controlled International Monetary Fund also reneged on its responsibility to watch currency cheating and, instead, morphed into a slush fund for infrastructure projects in poor countries."

I thought that from the initial Bretton Woods retreat were created GAAT (now WTO), the World Bank, and the IMF. The U.S. controls the World Bank leadership and the Europeans control the IMF.
If you recall the amorous Wolfowitz, that romantic NeoCon of Iraq invasion fame as the Bushwa appointee to be Pres of the World Bank.

It is the world bank that lends for infrastructure projects and the IMF that lends to central banks or respective countries so they can support the value of their respective currencies.... i.e. to avoid market devaluations in the raider Soros types of pirating for value plunder.

[tomas0808]

They are enemies of the American people. The rich have become our enemy and we will have our revenge

[Henry]

"Successive American regimes allowed the Federal Reserve Bank to print money without responsible controls"

This is a very poor description of what has taken place. I provide for your education the Fed history of money. You can see currency and demand deposits all the way back to the 50s. The Fed has not been printing printing money out of any norm.
http://www.federalreserve.gov/releases/h6/
Money comes, not at the fed level, but take a look at the FHLB issuing debt that is picked up by trade surplus excess at the China level and lending trillions to banks in this country as "new" M-3 money which has nothing to do with the Fed printing money... You should think about what the so-called "carry trade" does to the creation of money and along with that the use of that money to artificially drive up prices. (the fed is oblivious to the carry trade)

[knosiswar]

Diane, look at the history of Banking with an eye to the involvement of JP Morgan, who was the agent of the Rothschilds. JP Morgan himself created the bank panics that brought us the Federal Reserve, which is neither Federal or a Reserve. It was JP Morgan bank who created Credit Default Swaps, and will benefit the most from the collapse of the American Banking System. What you are suggesting is the goal that these banking families have been working towards, a one central international bank. One privately owned bank that will control the money supply for all people. As soon as the dollar bottoms, we will lose our soveriegnty under bankruptcy, and China and Russia will be crippled. Please read through the following website;

http://www.fdrs.org/index.html

[Sundialsvc4]

Let's not be afraid to start using the "C" word, Diane: "C-R-I-M-E."

This is the financial engine of the military industrial complex: the folks who say, "War is good! We sell over 3 billion bullets a month!"

Many hundreds of "civil officers" are thoroughly soaked in it, and they've been that way for both your entire lifetime and mine.

We remember what used to be ours, don't we? To quote the Billy Joel song, "the promises our teachers made, if we worked hard, if we behaved" were all based on "what was real: iron and coke, chromium steel."

The UAW is demanding the wages that we used to have because we used to be able to afford them ... and gold was $32 an ounce.

Fundamentally, the bankers are promising us all that "they can fix this" on their magic balance-books. But they can't. That's a leprechaun's promise.

Our "any civil officer"s have been knowingly colluding with, and participating in, the greatest financial swindle in our planet's history. Start at the top and work down, or at the bottom and work up, but seize them. Don't let them get away.

[BobLablah]

You got it almost all right but you forgot to include US citizens who bought houses they couldn't afford.

[Rule Of Law]

But were told that they could! That's the difference and that's the predatory part of the lending scam.

[Bjarni]

I was about to buy a house but realized that the money wasn't there. People need to take some responsibility for their own actions. People got greedy and just because realtors (who are in the business of selling houses not protecting their customer) told them to take the dive doesn't make the indivitual any less responsible. And alot of people lied about their income to get even more expensive houses so that portion is 100% their own fault.