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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Lymond who wrote (72046)12/17/1999 8:39:00 PM
From: Knighty Tin  Read Replies (1) | Respond to of 132070
 
John, Moral hazard is a problem, but the entire magilla is not just moral hazard. By taking money from other parts of the economy to bail out the banks cycle after cycle, the Fed reduces investment in productive capacity until we have reached our current stagnant level. Also, regular bailouts encourage the banks to be highly speculative, as there has been little or no downside to being wrong and huge personal rewards when they are right once or twice a decade. And, of course, the amount of derivatives risk at the banks today are not an amount the Fed can fix when it goes bad.

Best,

MB



To: Lymond who wrote (72046)12/20/1999 5:21:00 PM
From: BGR  Read Replies (1) | Respond to of 132070
 
So, the Fed did its job and brought the US economy - perhaps the world economy - back from the verge of a recession. You would rather have seen a few billion jobs lost worldwide so that the banks were shown tough love and taught a lesson in the bad consequences of inept risk management? Not me, but then I guess I work for a living, so I am biased.


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