Wednesday, April 22, 2009

Break Up the Banks

·

I sense this idea is starting to gain some well deserved momentum. Mark Thoma has some detailed commentary on why he thinks the large banks may actually be the root cause of the current crisis:

But what should we make of the fact that every singe step in the process is compromised? Every market that was supposed to self-regulate failed? Does every single market in the chain fail at the same time through some highly unlikely coincidence? What are the chances that, on their own, independently, each and every step in the chain would have been subject to a market failure that just happened to let the bubble keep inflating? Whatever it took to keep the money flowing through the system seems to have come to pass.

So more and more I'm starting to thing there may be a single explanation after all, that the regulators of these markets were captured by powerful forces that wanted the game to continue. The power of regulators, and the will to enforce the regulations, must match - in fact exceed - the will and power of those being regulated to resist having constraints placed on their behavior. I've talked about why ideology may have eroded the will of regulators, but their will is partly a function of their power. So long as we allow huge, clearly over-sized financial institutions to exist, this problem will potentially be present.

2 comments:

Erica Smith said...
April 27, 2009 at 4:02 AM Delete Comment

Hi,

This is Erica Smith, owner of some quality financial websites having strong internet presence,high traffic and good quality content. As I found your website is very much relevant to my one, I'd like to have you as my link partner.

I have few other finance sites/blogs(with good pr) to link back to your website. I have
several brand new finance related article(250-300 words) which I wish to post in your site and it will enrich your site.

All the websites of mine are frequently cached and the articles get updated almost every week.

If you agree to do link exchange with me, then both of our sites will be benefited in terms of visitors and page ranking.

Have a nice day.

regards,
Erica Smith
ericasmith568(at)gmail(dot)com

Mike said...
June 27, 2009 at 9:58 AM Delete Comment

Testing comment posting

Post a Comment

Our Deal

The markets are crashing, thousands of people are losing their jobs and the government keeps funneling money into broken banks. This little blog will help explain why this is happening and how we fix it.

I'd like to preface this experiment with a contract between myself and my readers. My promise to you is that I will be civil, non-ideological, well researched and honest. In return, I only ask that you think.

Send questions to: ouremptywallets@gmail.com

Quick Search

Recent Comments