Gyroscopic Investing

I just read this article by one of my favorites, Jim Rickards:

http://www.usnews.com/opinion/blogs/eco ... ial-crisis

In it he states:

"Yet, the fact that there were so many parties to blame should not be used to deflect blame from the most responsible parties of all—the big banks. Without the banks providing financing to the mortgage brokers and Wall Street while underwriting their own issues of toxic securities, the entire pyramid scheme would never have got off the ground.

It was Glass-Steagall that prevented the banks from using insured depositories to underwrite private securities and dump them on their own customers. This ability along with financing provided to all the other players was what kept the bubble-machine going for so long."

So was the 1999 repeal of Glass-Steagel the main cause of the financial crisis?

It was a substantial enabling factor.

MediumTex wrote: It was a substantial enabling factor.

I concur. I think that the events of 2008 would have been much less severe, or maybe even avoided, if Glass Steagall were still on the books.

Ad Orientem wrote:

MediumTex wrote: It was a substantial enabling factor.

I concur. I think that the events of 2008 would have been much less severe, or maybe even avoided, if Glass Steagall were still on the books.

It's sort of the financial equivalent of the laws that prevent crazy people from buying guns.

Reub wrote: So then, should the law only be in liberal, big cities where the general population can never be trusted?

All I'm saying is that trusting banks with financial speculation is almost certain to end in tears.