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Who stands to gain the most by keeping the American people polarized and hating the Government?
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Jun 17, 2012 11:32:27   #
docrob Loc: Durango, Colorado
 
When J.P. Morgan's CEO Jamie Dimon testified before the Senate Banking Committee last week, many articles reporting the hearing noted how kindly the super-banker was treated by the committee. Dimon flaunted his presidential cufflinks, presumably given to him by President Obama (who has also praised Dimon publicly). The senators heaped accolades upon Dimon while asking very little about how he blew up to $7 billion of his depositors' money. After watching what this nation has gone through with its top bankers over the last four years, the reception Mr. Dimon received could not have been made up by Kafka. It stands as a near perfect example of institutional failure of a democratically elected institution and the supremacy of financial corporations as their replacement.

But it wasn't always like this.

Prior to FDR and his reforms (during the 50 years of which there was not a single American financial panic), panics were quite common. Every few years, a massive loss of confidence in financial institutions would take place, destroying massive amounts of wealth and ruining the economy. In 1907, there was a massive financial panic much like in 2008. Prior to the crash, speculators began to make risky side bets with the assets of insurance companies (like speculators do with pension funds these days). One such company, one could say the equivalent of Lehman Brothers, was the Knickerbocker Trust Company. Knickerbocker was a high flyer, with plenty of its traders and executives enjoying lavish lifestyles much like our investment bankers today. Knickerbocker, backed up by a syndicate of the nation's top banks, engaged in an elaborate bet to corner the market on copper. A massive amount of debt was run up against bank deposits and insurance company reserves in an attempt at monopoly. This didn't work out, naturally, so the trust collapsed and took the entire banking system down with it. There were bank runs. Industrial companies that depended on credit lines were ruined. Insurance companies failed to pay claims. Nationwide panic ensued.
J.P. Morgan
J.P. Morgan (Wikimedia Commons)
Into the breach stepped one John Pierpont Morgan. Morgan had some experience with panics over his long career in finance, notably the Great Panic of 1893, a financial crisis brought about by railroad stock speculators. A massive depression followed. In the 1907 disaster, Morgan organized the response to contain the financial damage to prevent a depression. He secured a huge deposit from the United States Treasury Secretary, as well as additional funds from John D. Rockefeller and Lord Rothschild of the famed European banking house. Morgan even pledged half his own personal fortune to guarantee the United States's credit to prevent loss of confidence in the Treasury's bonds. While Morgan contained the panic and even managed to make a slight profit for his trouble, he was not pleased with having to deal with things in such a risky way:

Even if Morgan made money after the fact in 1907, the expectation of higher default risk made the possibility of lending in future panics unattractive. Perhaps this is what was realized by the New York bankers, causing them to abandon their role as de facto lenders of last resort and setting the groundwork for the establishment of the Federal Reserve System.

After many years of study initiated by Morgan, the Federal Reserve was established to mitigate the risks of financial panic. The New York branch of the bank welcomed its first president, a Mr. Benjamin Strong, longtime assistant to Morgan. While President Roosevelt was pleased with Morgan's intervention, he was no fan of any one person having that much power. Nor was he any friend of Morgan's after having beaten him in the Supreme Court during TR's successful breakup of Morgan's western railroad trust. Still, despite all this, Roosevelt and his hand picked successor Taft went on to give a great deal of latitude to Morgan and his allies in setting up the basic structure for the Federal Reserve.
Rep. Arsene Pujo of Louisiana circa 1913 (Wikimedia Commons)
Rep. Arsene Pujo (D-LA), c. 1919
All of this seems so familiar to us, doesn't it? We too have had a financial crisis brought about by the speculation of bankers. Our Treasury officials are cozy with the big banks just like in 1907. But last week's hearing before the Senate Banking Committee stands in stark contrast to what happened in Congress to a J.P. Morgan leader over 100 years ago. The Pujo Committee was formed as a subcommittee of the House Banking Committee and was headed by Louisiana Democratic lawyer and congressman Arsene Pujo.

The Pujo Committee was the father of the more famous Pecora Commission, which looked into the causes of the Great Depression. Needless to say, J.P. Morgan himself was not welcomed into the hearing room and heaped with praise as Dimon was. In fact, he endured a torrent of tough questioning at the hands of the Committee, and derision and scorn on the House and Senate floor. Pujo's report is absolutely scathing in its takedown of Morgan and the big banks. The committee's lawyer lit into Morgan over and over again during several brutal days of testimony. In the end, some of Morgan's friends speculated that the stress of the hearings may have killed him.

Today, we have a situation where the majority whip of the Senate famously noted, speaking of Congress, that the bankers "own the place." Which is interesting considering the largest financial contributor to that Senate committee is...whaddayaknow...JP Morgan. Perhaps there needs to be a committee to investigate how that came about. You'd think a sitting Senator who is bold enough to admit that a private group of bankers owns a democratic institution would call at least one day of public hearings into the matter. Maybe then we could get to the root cause of why we have had three financial panics since the government began dismantling FDR's reforms. Maybe some sort of congressional committee concerned with banking could investigate the matter.

Perhaps one day someone on the Senate Banking Committee Banker's Senate Committee will figure out that it is their job to supervise banks and not the other way around.

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Jun 18, 2012 07:04:58   #
Opus Loc: South East Michigan
 
Last night 60 minutes showed how members of congress are using inside information they get through their jobs to enrich themselves and how there own financial interests influence legislation. It cuts across both parties. Until people pay as much attention to politicians as the do American Idol things will not get any better.

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Jun 18, 2012 07:08:04   #
bull drink water Loc: pontiac mi.
 
i guess it's true,We have the finest politicians money has bought.

Reply
 
 
Jun 18, 2012 08:27:55   #
docrob Loc: Durango, Colorado
 
bull drink water wrote:
i guess it's true,We have the finest politicians money has bought.


we do and the sad thing is they can be bought so cheap

Reply
Jun 18, 2012 08:35:51   #
Dan821 Loc: Traveling........
 
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.

Reply
Jun 18, 2012 08:38:25   #
docrob Loc: Durango, Colorado
 
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


thats on the agenda but first stop is overturning Citizens United

Reply
Jun 18, 2012 08:53:19   #
RixPix Loc: Miami, Florida
 
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


That good-ole-boy network is full of new members every couple of years...especially with the last election.

Reply
 
 
Jun 18, 2012 09:19:05   #
docrob Loc: Durango, Colorado
 
RixPix wrote:
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


That good-ole-boy network is full of new members every couple of years...especially with the last election.


.....yes and that hasn't changed a thing has it?

Reply
Jun 18, 2012 09:53:11   #
RixPix Loc: Miami, Florida
 
docrob wrote:
RixPix wrote:
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


That good-ole-boy network is full of new members every couple of years...especially with the last election.


.....yes and that hasn't changed a thing has it?


No it hasn't the new Tea Party members are as bad as the one's they replaced.

Reply
Jun 18, 2012 09:58:02   #
docrob Loc: Durango, Colorado
 
RixPix wrote:
docrob wrote:
RixPix wrote:
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


That good-ole-boy network is full of new members every couple of years...especially with the last election.


.....yes and that hasn't changed a thing has it?


No it hasn't the new Tea Party members are as bad as the one's they replaced.


maybe its the system - that and the fact that once your in the club you will do what ever it takes to stay in it. Maybe we, the people need to change the way the system currently works (i use that word loosely).

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Jun 18, 2012 10:19:39   #
ggttc Loc: TN
 
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


We have term limits...they are called elections...as Opus said above when we start paying attention to our elections as much as we pay attention to American Idol....

Reply
 
 
Jun 18, 2012 10:24:26   #
Dan821 Loc: Traveling........
 
I just finished reading a very good book about this very subject and the inside scoop on what goes on.
"The Debt Bomb" by Senator Tom Coburn

http://www.amazon.com/gp/aw/d/159555467X/ref=mp_s_a_1?qid=1340029333&sr=8-1

It's worth a look if you are interested.

Reply
Jun 18, 2012 10:55:36   #
micro Loc: Texas
 
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


I personally have two issues (concerns) about term limits - first is that with a constantly revolving congress (federal, statehouse, municipal.....) the bureaucrats gain disproportionate influance (and the bureaucrats aren't elected by anyone).
Second, it takes an educated (not school but interest) and involved electorate to assure a representative government.
As long as we allow ourselves to be influanced solely by inflamitory media soundbites we are doomed to more of what we have.

Reply
Jun 18, 2012 11:05:14   #
docrob Loc: Durango, Colorado
 
micro wrote:
Dan821 wrote:
A good start would be "term limits".
Too much of a good-ole-boy network going on in Congress.


I personally have two issues (concerns) about term limits - first is that with a constantly revolving congress (federal, statehouse, municipal.....) the bureaucrats gain disproportionate influance (and the bureaucrats aren't elected by anyone).
Second, it takes an educated (not school but interest) and involved electorate to assure a representative government.
As long as we allow ourselves to be influanced solely by inflamitory media soundbites we are doomed to more of what we have.
quote=Dan821 A good start would be "term lim... (show quote)


As long as American Idol gets more votes and more interest than who is running the country we are for sure in for big trouble - I mean who remembers Taylor Hicks?

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Jun 18, 2012 11:10:10   #
micro Loc: Texas
 
We're screwed!

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