De Graaf

The Benefits of Too Big to Fail

Sean Ryan is spot on.

Explicit or implicit, either way the costs of implicit backing of risk by governments are obvious now.

If TBTF banks are allowed to exist in the future, which I expect they will, then improved regulation and higher risk insurance should be implemented on a global basis to offset the systemic failure. I believe Strauss Kahn of the IMF talked about that latter issue recently, to form one global pool of insurance covering all major markets.

You can allow greedy bankers to continue, or you socialize some of their profits in insurance pools on a pro rato basis. The bigger the bank, the more it contributes.

Hard work should always be rewarded without limits. But not on the back of society by means of Keynesian leverage.

Time for Austrian economics. The common individual centralized. Not MBA bonuses.

Why Bank Nationalization Will Never Happen

Good article, thank you.

I wonder if the US government has learnt anything from Japan. They studied the deflation cycle, but they aren't responding properly! I tell you, its way to slow.
Recently there was an article about Asian analysts calling to the US for more money into its system. They see the exact same thing happening that Japan did wrong in the '90s. The eventual breakthrough and its rise of the three pillars were based on the nationalization of Jap banks. After that things went into recovery mode.

The US of A is way to slow with the injections. My personal opinion is to let the system fail and stop the phoney money policy, but you know politics. For a politician to face the gallows is simply doing nothing. Obama needs to respond for his constituents, but we all know (at least the sane ones do) that this stimulus is merely a jobsaver. It won't get us out of this mess.
Just like Japan did, America is going to use a few trillions of dollar more to get out of this crisis....and fast.

Just look for the reports on how much Japan is pushing through for stimulus as we speak....