Economist Paul Krugman Opposes Economic Test For SIFI Decisions: Financial Advisors' Daily Digest

by: SA Gil Weinreich

Summary

Should the government consider the economic costs to a corporation it classifies as systemically important?

A CFA presents an analysis of how to make $10 trillion, but finds most attendees miss the most important part.

SA contributors are overwhelmingly discussing market volatility today.

You'd think an economist would favor a cost-benefit analysis, but Nobel Prize winning economist Paul Krugman doesn't want to require the government to use an economic test in exercising its regulatory powers over U.S. businesses. So argues banking analyst Kurt Dew in a sort of debate over the MetLife court victory over the government's declaring it a systemically important financial institution. Dew warns:

"As the SIFIs are gradually seized up by the constantly increasing restrictions on their permissible activities, financial markets, and the economy as a whole do not go to sleep. Traders still find a way to position themselves to profit from their beliefs. Corporations still take risks in pursuit of profit."

And herewith a number of current links, a majority of which address market volatility in some fashion or another: