"Anything Goes And Nothing Matters"

Tyler Durden's picture

Submitted by James Howard Kunstler of Kunstler.com,

The so-called Volker Rule for policing (ha!) banking practices, approved by a huddle of federal regulating agency chiefs last week, is the latest joke that America has played on itself in what is becoming the greatest national self-punking exercise in world history.

First of all (and there’s a lot of all), this rule comes in the form of nearly 1,000 pages of incomprehensible legalese embedded in what was already a morbidly obese Dodd-Frank Wall Street Reform (ha!) and Consumer Protection (ha!) Act of 2012 that clocked in at 2000 pages, not counting the immense rafts of mandated interpretations and adumbrations, of which the new Volker Rule is but one. These additions were required because the Dodd-Frank Act itself did not really spell out the particulars of enforcement but rather left it to the regulatory agencies to construct the rules — which they did with “help” of lobbyist-lawyers furnished by the banks themselves. That is, the lobbyists actually wrote the rules for Dodd-Frank and everything in it, which means the banks wrote the rules. Does this strain your credulity? Well, this is the kind of nation we have become: anything goes and nothing matters. There really is no rule of law, just pretense.

The Volcker Rule was a lame gesture toward restoring the heart of the Glass-Steagall provisions of the Banking Act of 1933, which were repealed in 1999 in a cynical effort led by Wall Street uber-grifter Robert Rubin and his sidekick Larry Summers, who served serially as US Treasury Secretaries under Bill Clinton. Glass Steagall was passed in Congress following revelations of gross misconduct among bankers leading up to the stock market crash of 1929. The main thrust of Glass Steagall was to mandate the separation of commercial banking (deposit accounts + lending) from investment banking (underwriting and trading in securities). The idea was to prevent banks from using money in customer deposit accounts to gamble in stocks and other speculative instruments. This rule was designed to work hand-in-hand with the Federal Deposit Insurance Corporation (FDIC), also created in 1933, to backstop the accounts of ordinary citizens in commercial banks. The initial backstop limits were very modest: $2,500 at inception, and didn’t rise above $40,000 until 1980. Investment banks, on the other hand, were not backstopped at all under Glass-Steagall, since their activities were construed as a form of high-toned gambling.

The Glass Steagall Act of 1933 was about 35 pages long, written in language that was precise, clear, and succinct. It worked for 66 years. Banking during those years was a pretty boring business, commercial banking especially. It operated on the 3-6-3 principle — pay 3 percent interest on deposits, lend at 6 percent, and be out on the golf course at 3 p.m. Bankers made a nice living but nothing like the obscene racketeering profits engineered by the looting operations of today. Before 1980, the finance sector of the economy was about 5 percent of all activity. Its purpose was to allocate precious capital to new productive ventures.

As American manufacturing was surrendered to other countries, there were fewer productive ventures for capital to be directed into. What remained was real estate development (a.k.a. suburban sprawl) and finance, which was the enabler of it. Finance ballooned to 40 percent of the US economy and the American landscape got trashed. The computer revolution of the 1990s stimulated tremendous “innovation” in financial activities. Much of that innovation turned out to be new species of swindles and frauds. Now you understand the history of the so-called “housing bubble” and the crash of 2008. The US never recovered from it, and all the rescue attempts in the form of bail-outs, quantitative easing, zero interest rates, have turned into rackets aimed at papering-over this national failure to thrive. It is all ultimately linked to the larger story of industrialism and its relationship with the unique, finite, fossil fuel resources that the human race got cheaply for a few hundred years. That story is now winding down and we refuse to pay attention to the reality of it.

The absurdity of Dodd-Frank and the Volcker Rule in the face of that is just another symptom of that tragic inattention. The baroque prolixity of these statutes must have been fun for the lawyers to construct — thousands of pages of incantatory nonsense aimed at confounding any attempt to enforce decent conduct among bankers and their supposed regulators — but it does nothing to really help us move into the next phase of history.

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666's picture

Just another day in Congress...

NotApplicable's picture

Oh but this is the next phase of history.

Ghordius's picture

actually it's a repeat of history. Romans had oral law. transmitted from father (senator) to son (future senator). Plebeians had no access to the laws, yet they were tried according to it by the elected magistrates (guess who got elected). at a certain point they went on strike and left the city, only to return after 12 bronze panels were set up where everybody could read the law

eventually we will have a similar fight in order to make the law again accessible to the ordinary individual human and citizen or we will progress to a point where access to a lobbyist/legal department is the main precondition to citizenship

yet remember that all this is mainly because corporations have it too easy. there is a difference between being pro-biz (aka business friendly) or being for a world where corporations are not only persons, but the only persons that really count (together with a selected few individuals that maintain platoons of lawyers as a matter of course)

btw, there is only one country I know of where "I'll sue you" is a major threat because the winner does not get refunded for his legal expenses

BigJim's picture

LOL, imagine what would happen to the price of copper and tin if every town square had bronze plaques inscribed with all the laws & regulations our dear leaders expect us to obey!

putaipan's picture

affluenza ... plauge of the end times.

Four chan's picture

the best money can buy.

putaipan's picture

the part i like (which i haven't heard anywhere else exept from steve keens' lips on max keiser's show) was that prior to dodd/frank, theoretically anyway-by law, the fed COULD have bailed out the little folk instead of the banks (woulda coulda been a whole lot smarter, cheaper, nicer etc) . now- written out baby. not leagal. not concievable. not allowed to happen. that's reform for ya ...

Ghordius's picture

thanks, this explains to me a lot (including lots ZH comments that left me puzzled). not in europe, btw. with the possible exception of the UK

BigJim's picture

Yes, despite being broadly 'Austrian' in my economics, I like Keen's idea of the central banks basically 'giving' everyone ~$100,000 each. If you have debt, you are obliged to pay it off; otherwise, the money is yours to do with as you wish.

Yes, I know it would have been inflationary; but, frankly, compared with the urgent task of rebalancing the wealth of the people vs the banks it would have been worth it.

At that point, Keen and I part ways: he'd like the State to have greater control over money, I'd prefer to see full-blown free-market free-banking, with banks offering competing currencies, backed by whatever their customers thought was reasonable collateral. I think we'd end up with something similar to a gold and silver standard, but with silver and gold floating against each other, not traded at a fixed ratio (which was Isaac Newton's mistake)

Jumbotron's picture

If the law of the land is now truly lawlessness.......then what recourse do citizens have anymore but to be lawbreakers and lawless themselves?

And secondly.....if there is no law or if the laws already on the books are not adequately enforced or are captured by the various entities such laws are supposed to fence in......can one really be accused of breaking the law at all in the course of self-preservation ?

At this point.....it seems to me that law is null and void.

I don't like this.....nor am I advocating anything........but this is the kind of environment in which revolution happens.  And then who the hell knows how that will turn out?

overmedicatedundersexed's picture

Jumbo, first everyone one of us is guilty of breaking one or more of the thousands of laws , or worse yet executive orders, so accept that you are a criminal, now about breaking laws that's what us criminals do. some just do it better than others..see J corzine on line study course::ON bending like your breaking it.

Loucleve's picture

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." – Henry  Ford

AngelEyes00's picture

Speaking of anything goes, does anybody else get the vibe via the jump in stocks this AM, that Bernank leaked to his wealthy constituents there will be no taper?

Groundhog Day's picture

 

Well, this is the kind of nation we have become: anything goes and nothing matters. There really is no rule of law, just pretense

 

No rule of law? so i don't need to pay any taxes then

Emergency Ward's picture

GD, that part is only for crony politicians and their parasite-class best friends.  Buried in the thousand pages of "baroque prolixity" is a sub-clause of a sub-section that dictates No Escape for Ordinary Tax Serfs -- ever.

OutLookingIn's picture

Don't you just love JHK's turn of a phrase?

"baroque prolixity"

baroque; overly decorative. prolixity; wordy

OneTinSoldier66's picture

"No rule of law? so i don't need to pay any taxes then"

 

Who is the Federal Reserve printing up money for? Why is it printing up the tax money(inflation of the money supply, and inflation is a tax) for just a priviledged select few of it's choosing? Why doesn't it just print up the tax monies for everyone? We are all supposed to be equal under the eyes of the law, yes?

Crash Overide's picture

Why do the slaves have to pay taxes if they can just print money and raise debt ceilings?

Loucleve's picture

God damn right.

IRS cheats.  Obama Lies.  Obama changes the laws (immigration enforcement, obamacare deadlines) to suit his whims.

They will ONLY GET THE MESSAGE when we stop paying taxes.

alphamentalist's picture

would have expected more juice than that. just the algos positioning for year end.

AngelEyes00's picture

Maybe the super wealthy one's (given the tip of no-taper) are simply offsetting the panicking j6p's that haven't a clue taper has been called off, so it isn't as much of a jump as it could have been but it's much greater than one would expect ahead of the actual news release. 

Either that or we have to assert the top brass do not get the news ahead of joe six packs.

 

 

SMG's picture

Did you know that as part of Dodd-Frank, You as a depositer become an unsecured creditor, and that if things go bad at the bank, they can take your money and give you shares of the bank.

Did you also know that US banks have 237 TRILLION in derivatives that are mostley tied to interest rates and only 9.5 trillion in deposits.

Be afraid.

kchrisc's picture

Be prepared.

Gold, guns, grub, guillotine (or gallows).

SDShack's picture

TPTB that run the world are all sociopaths. The creed of a sociopath is "Anything Goes". The only way you stop a sociopath, short of the final solution, is the rule of law... enforced judiciously. So it's no surprise that the rule of law is being systematically destroyed. Glass-Steagall and the Constitution were the only bulwarks agaisnt these sociopaths. The NWO is fast approaching.

sosoome's picture

"Did you know that as part of Dodd-Frank, You as a depositer become an unsecured creditor, and that if things go bad at the bank, they can take your money and give you shares of the bank."

Isn't that the way a free market should work? If a bank goes under, why should any other entitiy besides those doing business with that bank be at risk?

Buckaroo Banzai's picture

Depositors have ALWAYS been unsecured creditors, Dodd-Frank didn't change this. The bank is NOT warehousing your money, rather, you are LENDING your money to the bank when you "deposit" it there.

I'm sure they put that language in Dodd-Frank to simply make existing law more explicit, especially given that the FDIC is for all intents and purposes bankrupt.

 

sosoome's picture

They put that language in to merely change who would save the bank; the depositors or the taxpayers. That's the problem. If a bank goes under, it should not be saved, nor should depositors be protected by taxpayers. That alone would make banks adopt much more conservative business models in order to attract depositors.

sosoome's picture

You are having a free market hallucination dude. That won't happen unless you start your own island nation somewhere. Dream on.

sosoome's picture

Talking to yourself on ZH is a sure sign of serious problems. You should seek help, fast.

Crash Overide's picture

They have gone too far with all this, it ends badly for them.

We are almost there, it's almost over...

Mercury's picture

Much of that innovation turned out to be new species of swindles and frauds. Now you understand the history of the so-called “housing bubble” and the crash of 2008. The US never recovered from it, and all the rescue attempts in the form of bail-outs, quantitative easing, zero interest rates, have turned into rackets aimed at papering-over this national failure to thrive. It is all ultimately linked to the larger story of industrialism and its relationship with the unique, finite, fossil fuel resources that the human race got cheaply for a few hundred years. That story is now winding down and we refuse to pay attention to the reality of it.


No, it has nothing to do with that whatsoever.

Not to mention that natural gas, which is now more abundant than ever, probably doesn't derive solely from fossils and probably isn't finite.

kchrisc's picture

Bankster's creed: "All is ours."

They will keep stealing as long as possible and then 'return'.

NIHILIST CIPHER's picture

SMG               Yes, many of us here at ZH are aware of this criminal activity but who will put them in jail?

WTFUD's picture

'Ernest' hold'em up hologram Holder

overmedicatedundersexed's picture

when laws are not applied, big crime never is as  easy and as very profitable..free corzine

perhaps someone in .gov might just wake up and do the peoples business, but then where's the profit in that?

Fix It Again Timmy's picture

This falls under the category, "No shit, Sherlock."....

NIHILIST CIPHER's picture

IMO the Volker rule was written in criminalese not just legalese as the author states.

JR's picture

When you're 10 years older, you'll see the tiny $23 billion cut over the next 10 years from the trillions headed back and forth from the banks of the Potomac to the banks of the Federal Reserve. But you'll have to look mighty closely!

“How can the dollar be anything except the world’s greatest monetary brand (grab) - the Coca Cola of money - how can it be anything else?”…  Jim Grant

http://www.zerohedge.com/news/2013-12-15/money-nothing-and-survival-fattest

“Some estimate the notional value of all derivatives contracts worldwide to be in excess of a quadrillion $!  To comprehend this number, look at it, closely; 1,000,000,000,000,000.  That’s a one with fifteen zeros.  Google ‘how long does it take to count to 1 trillion’ and answers vary between 31,000 and 32,000 YEARS!  A quadrillion is 1000 trillion.” – Shawn Brown, Part 2 of my conversation with Jim Bruce of Money for Nothing: Inside the Federal Reserve (December 12, 2013)

http://www.sbrownassociates.com/the-coca-cola-of-money/

NEOSERF's picture

You see it everyday driving, where people decide the laws, rules or common courtesy don't apply to them anymore; I have to be more important than all of these people in front of me, I will just jump the line.  Make no mistake about it, this is the start of the final convulsion that will define the end of Central bank experiments.  The top 2% know it and are busy stealing what is possible, fortifying their assets and buying islands.  No doubt the floating billionaire boat tells you all you need to know about how they view the coming carnage...what they haven't foreseen is that Mad Max is insatiable.

AngelEyes00's picture

That's my impression too NEOSURF, that the rules are being tossed out to provide opportunity to steal as much as possible because the top x % know it's endgame. 

Mike in GA's picture
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Read more at http://www.brainyquote.com/quotes/quotes/h/henryford136294.html#1QXrXtUyEfEookYk.99

Revolution awaits.  Henry Ford decried this very issue 90 years ago and revolution not only has not occurred, the excesses of predatory banking have grown to the point that now failure takes down the economy, and the economy takes down the state.  How can this possibly end in anything but brutal tyranny or abject dystopia?

lynnybee's picture

yup.  lawless.  like Catherine Austin Fitts calls it, "DISASTER CAPITALISM."   cause a disaster, then, go in & clean it up & voila, making money via mayhem & disaster.

putaipan's picture

naomi klein. but fitts would probably call it sumpin' too. why are all my heroes women now - prins, edmonds, hudes, landuar, barnhardt, kaptor, warren(?), the lady who called out derivitives in the first place. etc etc ad nauseum.

putaipan's picture

hey ... i punctuated that it was questionable. isn't she working on restoring glass/steigle?

Buckaroo Banzai's picture

I'm sure she's "working" on something. There's a reason that she's the only one on that list who's on the inside: she's a tool.

All_Your_Base's picture

Brooksley Born should have gone Jason Bourne on Larry's fat ass.

jtz5's picture

It really is funny that the last three presidents pledged the following just after being elected.  I mean, did they deliberately say this knowing the opposite would be true?

Obama - “Transparency and the rule of law will be the touchstones of this presidency.”

Bush - "...restore honor and dignity to the White House."

Clinton - “...the most ethical administration in the history of the Republic.”

overmedicatedundersexed's picture

jtz5 you missed bushes worst lie ever: "NO Nation building." of course now under Obuma we left Iraq( or did we see troops listed as advisors ala viet nam. warms your heart"