Unregulated lending led to the real-estate collapse of 1926 that exposed the fraud of laissez-faire Republican policies. This led directly into the first Republican Great Depression and today banks are failing right and right from the very same failed policies. Corus Bank was one of the big players in the Florida condo speculation bubble and was seized Friday by the FDIC. This will cost the taxpayers a minimum 1.7 billion Dollars as the bulk of its assets remain on the FDIC books . Ninety-one banks have failed this year for the same reason and another 1800 banks are expected to follow. Last week they closed five banks at a cost of 401 million. Keep this in mind when the Republicans whine about volcano monitoring, we should have had Republican monitoring.
The Federal Reserve was the biggest coconspirator with the Bush Crime Family in the deregulation that created the recently burst real estate bubble that had been driven by cheap money from the Fed. This bubble was produced in order to create a trillion in sub prime loans in order to create 40 plus trillion in credit derivatives which drove an estimated quadrillion in international trading in these worthless instruments (this estimate from the Bank of International Settlements (BIS) the clearinghouse for central banks. Now Treasury Sec. Tim Giethner was on their board at the time). Greenspan created this bubble to maintain the fiction that all of the big US banks were not insolvent. The credit freeze of a year ago was from the BIS raising the capital requirements on these banks to make up for all the credit derivatives they were using to pad their balance sheets, effectively declaring them insolvent.
Allan Greenspan resigned in disgrace as Fed Chairman (although you wouldn’t know it from the corporate media) for his active participation in this fraud. Greenspan wrote his doctoral thesis on the 1926 crash and knew fully well what he was doing. Of course no one should be surprised since it was Greenspan who wrote an expert opinion that John McCain used to keep Federal regulators off the back of Lincoln Savings and Loan for two years costing the taxpayers and the victims of all S&Ls at least a trillion dollars (back in the eighties a trillion was still a lot of money).
Remember that Greenspan was the expert on real estate bubbles and his scholarly paper provided to Republicans was that what the S&L’s were doing was a perfectly sound business plan. Federal regulators were just being sticks in the mud since they didn’t have a Ph.D. in real-estate bubbles. They were still operating under New Deal laws and regulations. These would be repealed or ignored by later administrations.
George W. Bush (Jr.) was the only brother who didn’t have a S&L rip-off going at that time. Daddy kept them out of prison but it ruined their prospects of being President hence we got W. The expert paper from Greenspan provided a fig leaf to help in their defense, after all if such a learned expert was wrong how could the Bushes have known? The reward for the learned expert being wrong was to be appointed Chairman of the Federal Reserve where he set about creating a succession of bubbles leading to the second Republican Great Depression.
Speaking of the current Great Depression; the trade deficit is up dramatically and can only be expected to continue to skyrocket as the USD heads toward the basement and the continued exporting of jobs makes this worse. We have lost so much manufacturing that we have no choice but to import goods or the stores will be empty. And, it’s not just lead painted toys that we are dependent on China to supply. Eighty percent of pharmaceuticals come from China or India. Medical supplies, car parts, military computer chips and on and on. You can’t name something that will no longer be available or will be in crippling short supply with the collapse of the USD.
The collapse of the Dollar is inevitable unless Obama is able to reverse the trend and this requires the cooperation of countries like the People’s Republic of China (the only country to threaten to nuke us in this century). Republicans can be counted on to obstruct any and all attempts to fix the economy. If you don’t know the fable about the fox and the scorpion crossing the river, look it up.