Boomerang

Boomerang

The Republican victory in Massachusetts was the death knell for the President's health care reform.

The Supreme Court added insult to democratic angst in its 5-4 decision removing campaign finance caps for businesses under a novel interpretation of protected free speech and "censorship."

The knee and the jerk, and not in that particular order, was an economic response by the President's economic team to attack the structure, size, and activity of banks able to take leveraged risks today with shareholder and depositor money because the Clinton Administration repealed the Glass Steagall Act in 1999

GS separated banking and investment banking functions since the Crash of 1929 because banks proved incapable of housing both functions under one roof, or management, without running the economy over the cliff.

The unfortunate and next financial step will be the contraction of equity markets around the world in the short term, financial institutions comprise roughly 15% of the global market capitalization.

And in the longer term it will be difficult for governments to borrow money to maintain even scaled down stimulus packages because that borrowing relies on banks ability to maintain the price of already scorched assets on their balance sheets.

The natural political reaction is to throw out the incumbents facing mid term elections in ten months financed by a better heeled opposition with newly christened free speech protections for campaign contribution largess.


BBC News - US Supreme Court overturns campaign spending limit