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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (38568)	11/13/2009 5:27:55 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: [Fed Funds is a subsidized (below market rate) borrowing program for the banking sector. As designed.] "That's a subsidy whatever they do with the money" Yep! Re: "Then don't give them preferential access." I agree. (But that is more easily SAID then DONE in this era of ever and ever BIGGER and BIGGER 'too-big-to-be-allowed-to-fail' firms.) Exactly where I started these posts: with my recommendation that HIGHER RESERVE REQUIREMENTS be placed (in tiers) on these firms that are so damn huge they ALWAYS will pose systemic risks. There are really only two possible effective solutions to the 'too big to fail' problem: 1) is vigorous anti-Trust action. (Break 'em all up.) 2) and the other (easier and more realistic I think) is to, the bigger they get, mandate higher and higher percentages of reserves. That way the risks of catastrophic economic collapse are reduced... and firms are incentivized to not get too big. (Expect we would see a lot of spin-offs and new public offerings... invigorating the economy and producing more growth as well.)