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For what was the government divided into three branches, but that each should watch over the others and oppose their usurpations?” –Thomas Jefferson to Nathaniel Macon, 1821. (*) FE 10:192

Thomas Jefferson on Politics & Government

Judicial Review

http://etext.virginia.edu/jefferson/quotations/jeff1030.htm

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“For the Judiciary to interpose in the Legislative department between the constituent and his representative, to control them in the exercise of their functions or duties towards each other, to overawe the free correspondence which exists and ought to exist between them, to dictate what may pass between them and to punish all others, to put the representative into jeopardy of criminal prosecution, of vexation, expense and punishment before the Judiciary if his communications, public or private, do not exactly square with their ideas of fact or right or with their designs of wrong, is to put the Legislative department under the feet of the Judiciary, is to leave us, indeed, the shadow but to take away the substance of representation, which requires essentially that the representative be as free as his constituents would be, that the same interchange of sentiment be lawful between him and them as would be lawful among themselves were they in the personal transaction of their own business; is to do away the influence of the people over the proceedings of their representatives by excluding from their knowledge by the terror of punishment, all but such information or misinformation as may suit their own views.” –Thomas Jefferson: Virginia Petition, 1797. ME 17:359

“[A very capital defect in a constitution is when] all the powers of government, legislative, executive and judiciary result to the legislative body. The concentrating these in the same hands is precisely the definition of despotic government. It will be no alleviation that these powers will be exercised by a plurality of hands, and not by a single one. One hundred and seventy-three despots would surely be as oppressive as one.” –Thomas Jefferson: Notes on Virginia Q.XIII, 1782. ME 2:162

“I said to [President Washington] that if the equilibrium of the three great bodies, Legislative, Executive and Judiciary, could be preserved, if the Legislature could be kept independent, I should never fear the result of such a government; but that I could not but be uneasy when I saw that the Executive had swallowed up the Legislative branch.” –Thomas Jefferson: The Anas, 1792. ME 1:318

Unlimited Powers are Always Dangerous

“Nor should [a legislative body] be deluded by the integrity of their own purposes and conclude that… unlimited powers will never be abused because themselves are not disposed to abuse them. They should look forward to a time, and that not a distant one, when corruption in this as in the country from which we derive our origin, will have seized the heads of government and be spread by them through the body of the people, when they will purchase the voices of the people and make them pay the price. Human nature is the same on every side of the Atlantic, and will be alike influenced by the same causes.” –Thomas Jefferson: Notes on Virginia Q.XIII, 1782. ME 2:164

from –

http://etext.virginia.edu/jefferson/quotations/jeff1070.htm

http://www.time.com/time/nation/article/0,8599,1843168,00.html?cnn=yes

How We Became the United States of France

This is the state of our great republic: We’ve nationalized the financial system, taking control from Wall Street bankers we no longer trust. We’re about to quasi-nationalize the Detroit auto companies via massive loans because they’re a source of American pride, and too many jobs — and votes — are at stake.

Admit it, mes amis, the rugged individualism and cutthroat capitalism that made America the land of unlimited opportunity has been shrink-wrapped by a half dozen short sellers in Greenwich, Conn. and FedExed to Washington D.C. to be spoon-fed back to life by Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson. We’re now no different from any of those Western European semi-socialist welfare states that we love to deride. Italy? Sure, it’s had four governments since last Thursday, but none of them would have allowed this to go on; the Italians know how to rig an economy.

http://www.dw-world.de/dw/article/0,2144,3660839,00.html

Finance | 21.09.2008

German Politicians Wary of US Financial Rescue Plans

On Saturday, German Chancellor Merkel told a meeting of conservative politicians in Linz, Austria that it was irresponsible for the US to let major banking and credit institutions operate with too little government oversight.

“It cannot work like that on an international level,” Merkel said.

Merkel said that she had tried to win support for greater transparency and regulation on international markets at the G-8 conference last year, but that governments including the US did not heed her.

German Chancellor Angela MerkelBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Merkel has been bluntly critical of US failures in the current crisis

Germany had expressed fears that hedge funds could threaten the stability of the financial system through their heavy reliance on borrowing to finance risky trading strategies. It has also raised concerns about private equity funds.

German politicians are skeptical about a $700 billion US bailout of markets and of calls to take similar measures as Chancellor Merkel criticized Washington for failing to implement stringent market controls.

A growing chorus of German politicians questioned over the weekend whether the unprecedented US rescue package meant to inject liquidity into the financial system would help to stem the crisis which has sent world markets into a tailspin.

“I have doubts whether that method is really the most clever one,” Michael Meister, deputy parliamentary leader of Chancellor Merkel’s conservative Christian Democratic Party (CDU) told business daily Handelsblatt.

http://www.france24.com/en/20080918-wall-street-winners-losers-financial-crisis-investment-banks-commercial-short-sellingInvestment banks vs commercial banks

Thursday 18 September 2008

FINANCIAL CRISIS

Wall Street’s winners and losers

Thursday 18 September 2008

The collapse of Wall Street’s investment banking giants has left many analysts wondering whether this is the end of the banking system as we know it. Amid the rubble, banks whose activities are more diversified are emerging as the winners of the day.

“This crisis looks a lot like the 1929 crash because banks are once again caught in the middle,” explains Vincent Catillon, an expert on crises in the banking system from the French Clermont-Ferrand University. “After 1929, banks were divided into investment and commercial banks to limit the damage. In the current crisis, we thought commercial banks would be the most affected, but it is the other way round. The so-called ‘universal banks’ are comparatively better off because they can rely on their deposits.”

The main difference between a commercial bank and an investment bank is that the former earns revenue by issuing primary loans from its pool of deposits while an investment bank brings debt and equity offerings to market for a fee.

Because their assets are tied to mortgages whose value has been falling in a tight credit market, investment banks’ stocks started crumbling over the last few months. At the end of last week, Merrill Lynch was trading for $17.05, well below what it was worth at its peak in early 2007, when its shares traded above $98.

http://www.france24.com/en/business-interview-david-wyss-chief-economist-standard-and-poors-wall-street-finacial-crisis-banks-fed-&navi=ECONOMIE

THE BUSINESS INTERVIEW

Standard and Poor’s chief economist talks about finance’s future

Friday 19 September 2008

Lehman Brothers filed for bankruptcy, the Fed rescued AIG, Goldman Sachs and Morgan Stanley became bank- holding companies. Raphael Kahane askS David WYSS, chief economist at Standard & Poor’s what lies ahead on Wall Street.

Wall Street has had yet another crazy week. But this time, the financial crisis has spiraled out of control. It’s not just Fannie Mae and Freddie Mac. The Fed has had to rescue AIG, the world’s largest insurance company, to save it from bankruptcy. The US Federal Reserve approved applications on Sunday from Goldman Sachs and Morgan Stanley to become bank holding companies.

This comes after Lehman Brothers filed for bankruptcy protection, and Bank of America moved to acquire Merrill Lynch.
Governments have tried to step up to the plate with a degree of intervention not seen since the Great Depression. Central banks are injecting massive amounts of cash to try to resolve the lending crisis that has plagued banks.

A year after the beginning of the sub-prime meltdown, the world economy is now entering into the next stage of the credit crisis, one that could potentially be more problematic than what we have seen over the past year.