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2009-10-21 Economy

How to manage the gigantic financial cuckoo in our nest

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Posted by tipper 2009-10-21 02:28|| || Front Page|| [1 views ] Top

#1 We must not get diverted by the financial sectors opposition or by populist rage. We must focus, instead, on the core issue. Trying to make financial systems safer has made them more perilous. Today, as a result, neither market discipline nor regulation is effective. There is a danger, therefore, that this rescue will lead to still greater risk-taking and an even worse crisis at some point in the not too distant future.

Either we impose a credible threat of bankruptcy, or institutions we have to support are made safer, or, better, we have both of these. Open-ended insurance of weakly regulated institutions that take complex gambles is intolerable. We dare not return to business as usual. It is as simple and brutal as that.

Well said. While I like his optimism re: the recovery, I'm not sure that it feels right for what's happening here in the USA. With the realistic fear of continued job losses, I don't see it. But then, expectations can drive the recovery, so I'm willing to feel all hope and changey and pretend that another boom is just around the bend.

Posted by Jumbo Slinerong5015 2009-10-21 06:20|| 2009-10-21 06:20|| Front Page Top

#2 Either we impose a credible threat of bankruptcy,...

Lost in all of this is the lack of accountability of the leadership and boards which seek to maintain their power, privilege and pay by proving institutional traders with 'magic' bottom lines that jeopardize long term health of the businesses. Tie their fortunes to that of the institutions [the company goes belly up, then their gains and assets also go belly up] to insure fiduciary responsibility.

Posted by Procopius2k 2009-10-21 08:26|| 2009-10-21 08:26|| Front Page Top

#3 Why, many wonder, should the rigours of the market apply most brutally to those innocent of causing the catastrophe?

Posted by KBK 2009-10-21 22:37|| 2009-10-21 22:37|| Front Page Top

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