Hmmm… Do We Need To Guillotine The WTO?
Courtesy of Karl Denninger at The Market Ticker
That sounds dramatic – even drastic.
But is it?
There’s an argument raised over at "Washington’s Blog" that the real cause of all the financial problems -the global mess – is the WTO:
On March 1, 1999, countries accounting for more than 90 per cent of the global financial services market signed onto the World Trade Organization’s Financial Services Agreement (FSA). By signing the FSA, they committed to deregulate their financial markets.
But let’s be straight here.
"Deregulate" does not give license to fraud, even though there are some who would argue otherwise.
The root issue with all of these "financial products" is that they are unmarketable unless someone lies.
You can’t sell a "structured product" comprised of liar loans if you’re honest about the "qualifications" (or rather, the lack thereof) of the borrowers at anything approaching a profitable rate of return. Nobody will buy.
With honest ratings a CDS + Bond will always yield less than the risk-free rate of return. This is because nobody works for free, and the more complex something is, the more it costs.
These are facts, not suppositions.
So WTO or no WTO, without willful blindness toward fraudulent practices the market will take care of the scoundrels. Without the ability to lie – that is, if we simply lock up all those who misrepresent credit quality the liar loan + CDS will yield less than a Treasury of equivalent duration, and as a consequence the purveyor of those liar loans will have to price them at a rate that accurately reflects their risk of default (plus his profit).
This instantly cuts the BS.
Yes, we could simply tell the WTO to get stuffed, and I can make a cogent argument that we should – for a number of reasons, not the least of which is that "free trade" doesn’t make allowance for those working under literal (or near-literal) slave conditions, such as Chinese and Vietnamese workers who are working under effective conditions of indentured servitude and lack the human and labor rights protections we enjoy in civilized nations. "Competing" with a labor source that effectively has a gun in its mouth is not only impossible, the concept is idiotic on its face.
But that’s irrelevant to the argument that "we were forced by treaty to deregulate." Among other things deregulation does not mean legalizing fraud and never has.
Second, the WTO’s "FSA" appears to have never been sent to Congress and thus has no force of law as a treaty. It is a mere "suggestion" – and one that Congress has every right to ignore, as do our regulators, as under The Constitution all Treaties must be ratified by The Senate – without that consent any purported "international agreement" is of no legal force whatsoever. Treaties cannot be amended once voted upon without being subjected to a second vote (and possible refusal); the FSA was an amendment to an existing treaty, and thus without being considered by The Senate is a nullity in terms of actual United States obligations.
The "globalists" (and scaremongers who believe we have sold out to them) would have you believe that we have somehow obligated ourselves. This is false. We have done no such thing, and whether our government has complied with these wishes (some would say demands) out of a desire to appease those who have bribed legislators with million in campaign contributions the fact remains that when it comes to legal force of law in this regard there is none.
This, by the way, includes the WTO, which has a nice list including the US on the web page referenced above. That too is, as far as I can determine, a lie as the FSA was never put to Senate Ratification, and without that having occurred it is legally void, whether the WTO likes it or not.
(PS: For those who wish to argue that the Republicans are to blame for all of the world’s ills, you should look into who was President when the negotiations took place on the predicate parts of the treaty that was ratified prior to the FSA "add-on" that has no force of law. Hint: He tried to hide what he had spilled on a particular blue dress.)
