I offered this in response to comments made on CNBC's Squawk on the Street this morning:
Before the end of SOTS this morning, Mark Haines maintained he could find no cause & effect
between govt policy and the economy. If I may, I'd like to offer what I believe is Mark's
missing cause and effect during both the Clinton and the Bush years.
During the Clinton years, Glass-Steagall was repealed. This had two consequences.
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First, the levee built decades earlier to protect consumers from predatory business practices
in banking and investments was breached. As a result, the waters of commerce came flooding in
to fill the void.
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Second, the wires to the regulator and safety switches were cut. This allowed our nation's
economic boiler to heat up faster and higher than advisable.
As floodwaters rose and the boiler's temperature left the acceptable range, an economic
bubble formed.
The fallacy of a bad idea is usually most evident when pushed to extremes. This is exactly
what happened during the Bush years as the boiler reached the danger zone.
Govt regulators then complained of lack of transparency and went back to sleep. No action
was taken [and the bubble burst].
CAUSE & EFFECT.
