Preventing catastrophe

It’s easy to point the finger at the US government for exercising hypocrisy on the world’s biggest budget. 

Its economy is driven mainly by warfare and it has an appalling foreign affairs record. It bullies because it can and it suffers from a complete lack of transparency, as exemplified by president Obama’s hostile reaction to whistle-blowing. 

But considering societies that kill and mutilate – mostly females – in the name of bronze-age religions, free-market democracy with all its faults has some appeal.  

Yes, there is hope for the world’s most influential and powerful entity: consider the recent ambition by a small group of senators across party lines to restore the financial integrity which helped make the US successful in the first place. 

The Glass-Steagall Act of 1933 is actually a well-known topic within Occupy activist circles, but what is it? To paraphrase the HBO series Newsroom, there are two types of banks: investment and commercial. Investment banks are the gamblers (futures trading, derivatives, hedge funds, etc) while commercial banks are where general savings and cheque accounts are held.

They were separated from each other after the 1930s depression because, when combined, it proved to be unstable for the entire nation – and world. But in 1999, both banking systems were again combined under president Clinton and guess what – there was a financial crash in 2008. The Washington Post online reported on July 12, 2013 that ‘Nobel laureate economist Joe Stiglitz, among many others, fingered 1999’s partial repeal of the [Glass-Steagall Act] law as a contributing factor behind the [2008] financial crisis.’

Why does this matter locally? Any collapse of the US economy affects the West, as it did in the 1930s depression. In 2008, billions were wiped out globally, affecting Australia’s local governments as many held ‘toxic’ assets tied to the US. 

Until we can wean ourselves from the US greenback we are stuck with their good or bad decisions.

Hans Lovejoy, editor