Same problem. Massive chaos, useful for ensuring that nobody is responsible for anything (excluding the occasional, strategic scapegoats).

Are they implying that the current mess was caused by international competition?... Really?...
"...will allow U.S. securities firms to remain competitive with the over-the-counter markets and international institutions and increase product innovation and investor choice."

Paulson and the other circus animals have to put on a show for the public.

I think any serious attempt to address the financial crises would include these elements:

First and foremost, the imposition of a Tobin tax on all financial transactions, not just forex. Financial trading is so massive right now that this small tax of less than one percent will raise nearly $1 trillion (tr not b). But as it will also knock out most of the speculation, that amount raised will rapidly shrink along with financial trading.

Second, we need something like a "bank holiday" but just for derivatives contracts. This prevents the financial system from totally crashing, which was the fear behind the Bare Sterns rescue.

Third, at the same time, the top derivatives dealers, which are the eight largest commercial and investment banks (and which account for over 90 percent of the derivatives) should immediately be put into receivership. If management complains, lock them up, send them to Gitmo, whatever, just get them the hell away from the controls.

Fourth, freeze all adjustable rate mortgages at the present rate, and roll back all the past eight months’ resets. This keeps people in their houses.

Fifth, a re-imposition of usury laws, with a top rate of say, nine percent. That provides an immediate stimulus for people with higg credit card rates, car loan rates, etc.

Sixth, end the reign of hedge funds by imposing the same standards of transparency and regulatory reporting on hedge funds that any other corporation has to comply with.

Seventh, freeze all large capital flows out of the United States that are not tied to the importing of goods and services.

Eighth, vigorously pursue the "claw back" provision of Section 304 of the Sarbanes-Oxley Act (a compensation forfeiture provision, limited to the CEO and CFO) of the top ten or twenty Wall Street firms, as well as Bear Stearns. Derivatives creation and trading is highly concentrated, with the top ten or twenty firms accounting for nearly 100 percent.

Ninth, mobilization of covert special operations against the City of London, which is actually more of a problem than Wall Street. Also, to head off another Business Plot (remember USMC General Smedley Butler?) Get the message across to international elites that WE. ARE. NOT. FUCKING. AROUND.

Tenth, hold a big conference with the heads of pension funds to determine what other measures they require to have them invest in emerging green technologies and infrastructure. No Wall Street people should be allowed anywhere near this conference.

Finally, the amount raised from the Tobin tax is used to fund a crash program of alternative energies, and of retrofitting residences and public buildings in our inner cities. This is aimed at creating a massive employment boom and getting a real economic recovery going. Reversing the sprawl of the suburbs is going to take much, much longer than installing insulation in buildings in our city cores, but that is the eventual goal.

is a continuing theme. I think the most important part of the plan is to make feeding and supporting the ponzi builders a little smoother. Might even make it legal. The FED is a private bank which has been successful in creating this mess. The private banking/investment world will not regulate itself so as to benefit the rest of the world.

What is happening is what needs to happen, the currency basis of the US needs to shift from non-tradables to tradables.

Unfortunately this is being done by the people who thought Iraq was the solution to our oil supply problems, Medicare Part D was the solution to our drug costs, and the revenue reductions would stimulate the economy and balance the budget. And that is not even a partial list.

While past performance is no indicator of future performance, past behavior is generally considered to be an indicator of future results.

"First and foremost, the imposition of a Tobin tax on all financial transactions, not just forex. Financial trading is so massive right now that this small tax of less than one percent will raise nearly $1 trillion (tr not b). But as it will also knock out most of the speculation, that amount raised will rapidly shrink along with financial trading."

Not just a Tobin tax, a Tobin-Pigou tax.

The biggest, most reckless credit experiment in history has started to implode. It's far too late to stop a complete systemic collapse now. Granting new powers to the agency most responsible for the mess simply does not make any sense.
[snip]
Instead, the proposal is to give Fed increased authority to watch over additional henhouses. And if there's one thing worse than the fox watching the henhouse, it's the Fed watching the henhouse. A quick look at history should be enough to convince anyone of that.

Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com .

Study of the history of money and banking in the US shows that there has been a running battle between Hamiltonians favoring centralization and republicanism (plutocratic elitism) and Jeffersonians favoring democratic populism. The former have fought incessantly for a monetary system under the control of a central bank in the hands of financiers, while the latter have insisted that there is essentially no difference between government bonds, one which taxpayers pay interest, and government bills on which they don't, e. g., Lincoln's "greenbacks" that paid for the Civil War instead of government debt. The difference is that the interest on government debt (bonds) goes to the rentier class and over time, wealth inevitably rises to the top. On the other hand, government bills don't require payment of interest through taxes, so there is no transfer of wealth upward to the rentiers.

This has resulted in an ongoing tussle between elitism and populism, and one could argue, is at the basis of it. For whoever controls the creation and allocation of money controls the game, i.e, the entire socio-politico-economic system of the nation. And the de facto linkage of central banks allows the international financiers to dominate global wealth and to shape global politics.

So the big news is that the Fed is now at top of the flow chart represents a further incursion by the Hamiltonians, as one would expect coming from the former chief of Goldman Sachs.

A big problem is that economics isn't the strong point of most politicians or the public, especially the intricacies of money and and banking. The Fed is poorly understood, with most thinking that it and other central banks like the Bank of England, are governmental institutions. However, that is not the case.

This misunderstanding suits the financiers just fine, in fact they planned it that way, as Woodrow Wilson rued when he later realized that they had pulled the wool over his eyes after the creation of the Fed in 1913 on his watch.

Essentially the Fed is the apex of a private banking system masquerading as a public one. The Federal Reserve System appears to be a quasi-governmental institution because the Board of Governors is appointed the President and must be approved by the Senate, but in fact, the board is always dominated financiers, due to the degree of expertise required and the size contributions involved, and their objective is to preserve and advance interests of the elite, not the people. Moreover, the member banks are private institutions, as are the primary dealers. In practical terms that puts the monetary system in private hands, whose object, being the collection of rent on money and wealth capture, is at odds with progressive social policy.

So this is potentially a lot worse that the shuffling of deck chairs that Krugman sees. This is another example of disaster capitalism at work.

Numerian: The war against the New Deal has just won an Astounding Victory