Demands to destroy the British financial empire are becoming more popular. Hey Harlem dudes, who will be the next guys to realize that it is time to go with LaRouchePac.
From: http://articles.businessinsider.com/2012-05-12/wall_street/31675260_1_glass-steagall-safe-bet-volcker-rule
Glass-Steagall worked for decades, as bankers were not allowed to take deposits and make risky bets with them. Risk can take two forms. It can be a bet on a less certain outcome, or a fairly safe bet levered up with funds from the Fed or who knows where.
Apparently Jamie Dimon made a relatively safe bet on interest spreads, levered up, so that if anything went wrong, it could be really bad. I am no expert regarding the inner workings of trading. However, while many in NYC in media were praising Dimon, I was aware that this bank was making very risky bets in the City of London, where collateral can be put up over and over again to guarantee positions.
... But it is my contention that Glass-Steagall won't be enough. It is necessary, or at least a really tough Volcker Rule is necessary. Perhaps some criminal penalties for screwing with deposits should accompany a Volcker Rule implementation. Don't be fooled, the bankers and the hedge funds and most Republicans hate the Volcker Rule. If the Republicans win, there will be even more gambling, more easy money, more housing bubbles and more madness.
Glass-Steagall should be accompanied with rules forbidding our banks to trade in the UK Square Mile. The financial system has lost a lot of money there. The bets are unlimited as you can rehypothecate collateral over and over there. That is not permitted on Wall Street.
If Glass-Steagall is passed, US multinational banks will be able to take borrowed money, and investment money rather than just deposits and gamble in the Square Mile and there will be nothing anyone can do to stop them. Unless they are forbidden to engage in unregulated gambling there they will get money from somewhere to gamble. It could be brokerage money, or money market money, who knows?
The banks will be at risk engaging in this behavior even without the use of passbook deposits. Banks may even use fictitious collateral in order to fund their behavior in the UK. If banks are now permitted to engage in off balance sheet transactions, what is to stop these transactions from taking place in total secret in the City of London with bogus collateral?
The Square Mile is unregulated and the Parliament of the UK has no power over this financial center, the closest thing to a New World Order that we have. Even the Queen of England bows to the mayor of the Square Mile when going within the walls of this original settlement of the City of London.
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