Bear Stearns and an Even Closer Shave
We all know about the Bear Sterns thing. They got themselves into trouble, their stock price dropped to nothing and the Fed stepped in to save the day. Save the day from what? The claim is that the world's financial system was at risk. If BS had gone under, the system would have "seized up."
The financial system relies on counter-parties 1) being able to pay each other what's owed them and 2) trusting that their counter party will pay them what's owed them. If someone can't pay you what they owe you, then you can't pay someone else what you owe them. And if you see lots of people not being able to pay up, you won't lend money to anyone else, thinking they might not be able to pay up. Since the world's financial system relies on financial institutions like banks and brokers lending to each other, the system can't work if either people don't pay up, or if people doubt whether people will pay up.
The Fed must have thought this potentially financially shattering event could have occurred; hence their intervention.
But on April 1st, another, basically unreported event took place that required the intervention of another powerful American institution: the Supreme Court. In this case, the United States barely escaped losing its sovereignty. While no one wants financial disaster, some people might think the loss of our sovereignty would ultimately be worse. But we escaped - this time.
In Medellin v. Texas, the Supreme Court decided that the United States did not have to accede to a decision made by the World Court in the Hague. That court instructed the State of Texas, and many other states, to re-try a group of convicted Mexican criminals for pretty much heinous crimes for which they had been convicted and sentenced. Some of these crimes have been on appeal for almost twenty years. And one of those appeals, Medellin v. Texas, tried the tactic of going to the World Court. (By the way, the crime involved the vicious rape and murder of young girls.)
Had the Supreme Court recognized the authority of the World Court in this instance, it would have admitted that the World Court had authority in our country higher than our own Supreme Court. The last time I looked, the Constitution specified the Supreme Court as the highest legal authority in our country. It doesn't mention the World Court.
By the way, the decision was 6 - 3. Maybe not as close a call as Bear Sterns taking down the world financial system, but too close for my comfort.
The financial system relies on counter-parties 1) being able to pay each other what's owed them and 2) trusting that their counter party will pay them what's owed them. If someone can't pay you what they owe you, then you can't pay someone else what you owe them. And if you see lots of people not being able to pay up, you won't lend money to anyone else, thinking they might not be able to pay up. Since the world's financial system relies on financial institutions like banks and brokers lending to each other, the system can't work if either people don't pay up, or if people doubt whether people will pay up.
The Fed must have thought this potentially financially shattering event could have occurred; hence their intervention.
But on April 1st, another, basically unreported event took place that required the intervention of another powerful American institution: the Supreme Court. In this case, the United States barely escaped losing its sovereignty. While no one wants financial disaster, some people might think the loss of our sovereignty would ultimately be worse. But we escaped - this time.
In Medellin v. Texas, the Supreme Court decided that the United States did not have to accede to a decision made by the World Court in the Hague. That court instructed the State of Texas, and many other states, to re-try a group of convicted Mexican criminals for pretty much heinous crimes for which they had been convicted and sentenced. Some of these crimes have been on appeal for almost twenty years. And one of those appeals, Medellin v. Texas, tried the tactic of going to the World Court. (By the way, the crime involved the vicious rape and murder of young girls.)
Had the Supreme Court recognized the authority of the World Court in this instance, it would have admitted that the World Court had authority in our country higher than our own Supreme Court. The last time I looked, the Constitution specified the Supreme Court as the highest legal authority in our country. It doesn't mention the World Court.
By the way, the decision was 6 - 3. Maybe not as close a call as Bear Sterns taking down the world financial system, but too close for my comfort.
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