71–80 of 107 posts
Earlier quoted context omitted.
Credit unions don't participate in FDIC insurance, they have arranged their own private insurance. So it is not a necessary evil.
Credit unions participate in the NCUA, which is decidedly not private. http://www.ncua.gov/Pages/default.aspx
The criminal actions[1] of Wachovia, Lloyds, Credit Suisse, Barclays, HSBC, et al have shown that the megabanks cannot be trusted to follow existing laws. The robo-signing debacle[2] has demonstrated amply that the financial sector can't be bothered to verify their data before destroying the lives of thousands of people. The LIBOR manipulation scandal[3] proves that even the industry's own measuring rods are bent and…
I always remember what Milton Friedman used to say, he was amazed be people who see failure of regulation and propose a fix by seeking to introduce even more regulation. "well this time it will surely work!" "if only we had the right kind of regulation/people in charge!" they say. That's never gonna happen. Breaking the system in chunks artificially will not work, because it will consolidate again and buy up the regu…
The criminal actions[1] of Wachovia, Lloyds, Credit Suisse, Barclays, HSBC, et al have shown that the megabanks cannot be trusted to follow existing laws. The robo-signing debacle[2] has demonstrated amply that the financial sector can't be bothered to verify their data before destroying the lives of thousands of people. The LIBOR manipulation scandal[3] proves that even the industry's own measuring rods are bent and…
I always remember what Milton Friedman used to say, he was amazed be people who see failure of regulation and propose a fix by seeking to introduce even more regulation. "well this time it will surely work!" "if only we had the right kind of regulation/people in charge!" they say. That's never gonna happen. Breaking the system in chunks artificially will not work, because it will consolidate again and buy up the regu…
As for "manageable chunks", vs. "artificial" chunks, I point you to this comment by Alan Greenspan, in http://www.freepatentsonline.com/article/Brookings-Papers-Ec..., that the current size is too large, and not manageable.
> For years the Federal Reserve was concerned about the ever-growing size of our largest financial institutions. Federal Reserve research had been unable to find economies of scale in banking beyond a modest size (Berger and Humphrey 1994, p. 7; see also Berger 1994). A decade ago, citing such evidence, I noted that "megabanks being formed by growth and consolidation are increasingly complex entities that create the potential for unusually large systemic risks in the national and international economy should they fail" (Greenspan 1999). Regrettably, we did little to address the problem.
> ... However, should contingent capital bonds prove insufficient, we should allow large institutions to fail and, if assessed by regulators as too interconnected to liquidate quickly, be taken into a special bankruptcy facility, whereupon the regulator would be granted access to taxpayer funds for "debtor-in-possession financing" of the failed institution. Its creditors (when equity is wholly wiped out) would be subject to statutorily defined principles of discounts from par ("haircuts"), and the institution would then be required to split up into separate units, none of which should be of a size that is too big to fail. The whole process would be administered by a panel of judges expert in finance.
This is based on issuing contingent capital bonds, which funds a "living will" "in which financial intermediaries are required to offer their own plans to wind themselves down in the event they fail."
Earlier quoted context omitted.
I always remember what Milton Friedman used to say, he was amazed be people who see failure of regulation and propose a fix by seeking to introduce even more regulation. "well this time it will surely work!" "if only we had the right kind of regulation/people in charge!" they say. That's never gonna happen. Breaking the system in chunks artificially will not work, because it will consolidate again and buy up the regu…
I used to be an Austrian but it's been almost a century now and it's become clear to me that the Keynesians are actually correct. Even after the GFC things bounced back very quickly. The power to inflate away old debt is too useful to sacrifice.
Whatever we do, the parasites who can print and dilute our currency through systematic inflation must be appeased and satisfied, or else they will inject poison into the entire system as a retaliation for trying to remove the blood sucking parasite. The bitcoin angle won't work.
I'm confused by this. The large banks are (arguably) more efficient because of economies of scale, eg. less duplicated management, purchasing power. So it's probably not a good idea to limit the size of banks which is what this article seems to propose, because that'll make banking more expensive. But the flip side is: why don't we just let megabanks go bust? If they go bust, the government steps in, briefly national…
>small institutions must submit to the rigors of the free market. >market discipline has worked to keep smaller institutions on the straight and narrow, it has been ineffective with megabanks >market participants have proved [in]effective in monitoring risks at these [huge banks]. >They know they will be protected by a taxpayer rescue should a large institution teeter. How is this not obvious to everyone involved?
However, just limit the amount of Federal Deposit Insurance that can be issued to one entity, if we can't figure out what they're doing.
Earlier quoted context omitted.
I used to be an Austrian but it's been almost a century now and it's become clear to me that the Keynesians are actually correct. Even after the GFC things bounced back very quickly. The power to inflate away old debt is too useful to sacrifice.
Hm, it's interesting, would you care to elaborate: what do you mean by "too useful"? Too useful for whom?
If the USA kept the gold standard, I seriously doubt they'd be the number 1 economy in 2013.
Earlier quoted context omitted.
I always remember what Milton Friedman used to say, he was amazed be people who see failure of regulation and propose a fix by seeking to introduce even more regulation. "well this time it will surely work!" "if only we had the right kind of regulation/people in charge!" they say. That's never gonna happen. Breaking the system in chunks artificially will not work, because it will consolidate again and buy up the regu…
I used to be an Austrian but it's been almost a century now and it's become clear to me that the Keynesians are actually correct. Even after the GFC things bounced back very quickly. The power to inflate away old debt is too useful to sacrifice.
You're just like Greenspan: an Austrian turned Keynesian.
Don't see many of those!
Earlier quoted context omitted.
Hm, it's interesting, would you care to elaborate: what do you mean by "too useful"? Too useful for whom?
Well let me put it this way: If the USA kept the gold standard, I seriously doubt they'd be the number 1 economy in 2013.