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Postre: Economics: How Long Will the Recession Last? (Bienvenido Macario, Philippines/US) (John Eipper, USA, 02/07/10 1:20 pm)
Tor Guimaraes wrote on 4 February: The seeds of this recession were planted a long time ago with the strip down of rules and regulations controlling risky and excessive behavior by financial speculators/manipulators. Bienvenido Macario responds: During the Thanksgiving holiday 2009 while driving up to the SF Bay Area on Interstate 5, I spotted a placard several times which read: "US Congress Created the Dust Bowl." I saw it no less than six times along the farming towns before the Panoche exit. I have no idea why the farmers put that sign up. Indeed the seeds of this recession were planted "a long time ago," then it started during Pres. Clinton's administration, at least according to Wikipedia: One of the reforms made in the aftermath of the 1929 crash was the Glass-Steagall Act of 1933, which prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and/or an insurance company. (It also established the FDIC. The Great Depression started when the banks failed. There was no FDIC when the Crash of 1929 happened.) Sixty years after the start of World War II in Europe, Pres. Bill Clinton signed a bill that repealed part of the Glass-Steagall Act of 1933 with passage of the Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999 (Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999). "The Gramm-Leach-Bliley Act of 1999 allowed commercial banks, investment banks, securities firms and insurance companies to consolidate. For example, Citicorp (a commercial bank holding company) merged with Travelers Group (an insurance company) in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica and Travelers. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act of 1933 and the Bank Holding Company Act of 1956 by combining securities, insurance, and banking, if not for a temporary waiver process. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the "financial services industry." Links: Gramm-Leach-Bliley Act of 1999 http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act Glass Steagall Act of 1933 http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act So how long will this recession last? Well it depends on the US Congress. The police have internal affairs and the military and even the CIA have the Inspector General's Office. What such office exists to check the US Congress? JE comments: Is GLBA responsible for "too big to fail" in the financial industry?