Why I Like Dodd-Frank

    In the last post about David Brooks and Newt Gingrich-two phoney baloneys who have the effect of further degrading American political discourse with confusing new packaging to the same failed policies of the Right-I digressed at the end to discussing Obama's health care bill-the Affordable Health Care Act (AHCA).

    As Brooks actually has the chutzpah to claim that Gingrich supports universal health care I pointed out that if this were so he wouldn't support the Republican party line that demands AHCA be abolished.

    David Brooks and his political non sequitors http://diaryofarepublicanhater.blogspot.com/2011/12/david-brooks-political-non-sequitors.html

    However I was just over at Yves Smith's Naked Capitalism where there were some song parodies and more serious videos of some Greenspan interviews.

    http://www.nakedcapitalism.com/2011/12/econoparody-the-cinders-of-ayn-rand.html

   What really caught my eye-and ear-was his alarmism about Dodd-Frank. Greespan who during his recent interview has made all kinds of poor analysis like claiming that the U.S. is in an unsustainable debt crisis claimed all sorts of nefarious unintended consequences from Dodd-Frank.

    Listening to him helps me realize that just as those who really value making health care available to Americans who can't afford it should defend AHCA and seek it's expansion if they don't think it goes far enough, similarly liberals must fight for and defend Dodd-Frank.

    For one thing the name "Frank" is a large reason why. Frank-who will be sorely missed-was one of the most astute and knowledgeable of Fed critics. While nothing more unreflectively "populist" than indiscriminate Fed-bashing and demands like Ron Paul to "End the Fed" Frank's criticism was on point as he saw its real problems and had some real solutions that could be used to rectify it-changing its structure and regulating it differently.

   That his name is on the bill tells me that it is on the right track at least as a starting point though you always have the left-liberals who want to do nothing by fulminate about how it doesn't go far enough. Again if you want better financial regulation fight for Dodd-Frank rather than against it-only via this road can it be improved and strengthened.

    However, if there's any doubt about the quality of Dodd-Frank at least as a starting point see the opposition of someone like Greenspan. For one thing he complains that in the original Federal Reserve the final agreement deliberately made the central bank less, well, central, by setting up all the regional Feds and governors. Greenspan warns that this would be undone. If so that's more than reason enough to support Dodd-Frank.

    Let's listen to the scare scenarios that Mr. Greenspan has been employing: "they could create the “largest regulatory-induced market distortion” in the US since the imposition of wage and price controls in 1971."

    http://www.ft.com/cms/s/0/169a1d8a-5a2f-11e0-86d3-00144feab49a.html#axzz1g9KGVhfZ

     What I take from this hyperbolic overstatement is that Greenspan really fears Dodd-Frank. So he is trying to make us afraid. What is he so afraid of?

      It should be kept in mind a central paradox of this former head central banker that he at one time advocated a return to the gold standard and even in his 2007 post-Fed book "Age of Turbulence" waxed nostalgic for the gold standard era. To me that makes about as much sense as looking back nostalgically on the dead ball era in baseball.

     His concern about U.S. Fed becoming less dominated by the regions is a tip off to what his real fear is. Whatever his fear is what it isn't is what he claims, namely  that Dodd-Frank is "a possible threat to US living standards."

    U.S. living standards have been in decline for 30 years and this hasn't bothered him before as he continued the "hard money" policies of Paul Volcker. It's the fear that the Fed's "independence" from concern about U.S. living standards might be implied by Dodd-Frank.