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March 24th, 2012 
FAKE NEWS for the Zionist agenda As a nation, we face a distinct choice. We can perpetuate too big to fail, with its inequities and dangers, or we can end it. Eliminating TBTF won’t be easy, but the vitality of our capitalist system and the long-term prosperity it produces hang in the balance.
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Greed led innovative legal minds to push the boundaries of financial integrity with off-balance-sheet entities and other accounting expedients. Practices that weren’t necessarily illegal were certainly misleading—at least that’s the conclusion of many post crisis investigations. [And the government encouraged such behavior. And see this.]
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Mammoth institutions were built on a foundation of leverage [which destabilizes the economy, but is still blessed by mainstream economists.]
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Make no mistake about it: A bailout is a failure, just with a different label.
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The machinery of monetary policy hasn’t worked well in the current recovery. The primary reason: TBTF financial institutions. Many of the biggest banks have sputtered, their balance sheets still clogged with toxic assets accumulated in the boom years.
In contrast, the nation’s smaller banks are in somewhat better shape by some measures. [And are therefore much better able to lend to small Main Street businesses.] Before the financial crisis, most didn’t make big bets on mortgage-backed securities, derivatives and other highly risky assets whose value imploded. [The big banks no longer do very much traditional banking. Most of their business is from financial speculation. For example, less than 10% of Bank of America’s assets come from traditional banking deposits. Instead, they are mainly engaged in financial speculation and derivatives. (and see this).] Coming out of the crisis, the surviving small banks had healthier balance sheets. However, smaller banks comprise only one sixth of the banking system’s capacity and can’t provide the financial clout needed for a strong economic rebound.
The rationale for providing public funds to TBTF banks was preserving the
financial system and staving off an even worse recession. The episode had its downside because most Americans came away from the financial crisis believing that
economic policy favors the big and well connected. They saw a topsy-turvy world
that rewarded many of the largest financial institutions, banks and nonbanks alike, that lost risky bets and drove the economy into a ditch.These events left a residue of distrust for the government, the banking system, the Fed and capitalism itself …. These psychological side effects of TBTF can’t be measured, but they’re too important to ignore because they affect economic behavior.
People disillusioned with capitalism aren’t as eager to engage in productive activities.
They’re likely to approach economic decisions with suspicion and cynicism,
shying away from the risk taking that drives entrepreneurial capitalism. The ebbing of
faith has added friction to an economy trying to regain cruising speed. [As we have noted for years, the economy cannot recover until trust is restored.]***
An unfortunate side effect of the government’s massive aid to TBTF banks has been an erosion of faith in American capitalism. Ordinary workers and consumers who might usually thank capitalism for their higher living standards have seen a perverse side of the system, where they see that normal rules of markets don’t apply to the rich, powerful and well-connected.
Here are some ways TBTF has violated basic tenets of a capitalist system:
Capitalism requires the freedom to succeed and the freedom to fail.
Hard work and good decisions should be rewarded. Perhaps more important, bad decisions should lead to failure—openly and publicly. Economist Allan Meltzer put it this way:“Capitalism without failure is like religion without sin.”Capitalism requires government to enforce the rule of law. This requires maintaining a level playing field. The privatization of profits and socialization of losses is completely unacceptable. TBTF undermines equal treatment, reinforcing the perception of a system tilted in favor of the rich and powerful.
Capitalism requires businesses and individuals be held accountable for the consequences of their actions. Accountability is a key ingredient for maintaining public faith in the economic system.The perception—and the reality—is that virtually nobody has been punished or held account- able for their roles in the financial crisis.
The idea that some institutions are TBTF inexorably erodes the foundations of our market-based system of capitalism.
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The TBTF survivors of the financial crisis look a lot like they did in 2008. They maintain corporate cultures based on the short-term incentives of fees and bonuses derived from increased oligopoly power. They remain difficult to control because they have the lawyers and the money to resist the pressures of federal regulation. Just as important, their significant presence in dozens of states confers enormous political clout in their quest to refocus banking statutes and regulatory enforcement to their
advantage. [Two leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City, Moody’s chief economist and many others have all said that the United States is controlled by an”oligarchy” or “oligopoly”, and directly or indirectly said that the big banks and giant financial institutions are key players in that oligarchy.]
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