Saying [in the introduction] that there are still no regulations implies that they think there should be. Since I think things are just fine and they could cut regulations further, I can disagree with the article without buying access to it.
Also, the idea of making banks "small enough to fail" is, as Paul Krugman says, no solution at all. It's nice to agree with Paul Krugman from time to time. When he and I both agree, we can be sure we are right [unless we are wrong]. He must have been reading my advice and getting the right idea.
It's easier to keep an eye on a few huge banks than hordes of little ones. Also, hordes of small ones can fail just as much as big ones can. 100 small failures = 1 giant failure and the consequences are just as final.
But it's best not to give the likes of Fannie and Freddie and Goldman Sachs and other friends of important people in high places a favoured position, which is partly why they got so big in the first place.
It's ridiculous to give them TARPs then whine that they are too big. Lehmans did not get rescued and was carved up and sold off.
Cut the barriers to entry then lots of smaller competitors will start up and take business from the biggies.
There isn't a problem which needs any more regulations. On the contrary, the government could do away with the requirement to have reserves altogether, and leave it to shareholders to manage their risks as they see fit.
The main problem is government monopoly, not the size of private enterprise. There are not many companies which don't have competitors working hard to do them down and take their business. Can you name one? Any company, no matter how big, if it fails, will have a horde of competitors swarming the debris to establish positions where the monster "ruled". Normally, the assets don't even stop service.
Globalstar for example took a huge load of my money with it into bankruptcy, there was no TARP for me. But the assets smoothly transferred to the new owners and continued in service. Bad luck for me. Maybe I should have asked the government for lots of OPM so I could remain as the owner.
Lots of people have lost money like that. That's just the nature of investment. Bad luck for Lehman shareholders too. Bad luck for housing speculators who borrowed 90% or 80% - they have lost their money and so have the mortgagees lost a good chunk of their loans.
Next time they'll be more circumspect.
Mqurice |
