Tuesday, September 15, 2009

The best sentences I've read this month

are written by John Cochrane and Luigi Zingales:

"The big banks know the government will bail them out, and they are already bigger, more global, more integrated and "systemic" than ever. They are making huge trading profits—profits that must someday turn to losses. If brokerage and banking are "systemically important," they cannot be married to proprietary trading. Yet the financial-reform plans do not even talk about breaking up this marriage—they hope simply to regulate the behemoths instead."

The whole article is well worth reading for its take on the "blame it on Lehman" meme.

1 comment:

Anonymous said...

well we speak so much about the corporate banking side and regulatory actions concerning them, but how about the pusher? Central banks. We shouldn't necessarily be speaking so much about breaking these oligopolies up as we should about breaking up their means to irresponsible leverage, bailouts, and the cause of inflation and weak money itself. But central banks have so deeply penetrated the mainstream economic movement, as well as all the "important" players who benefit from this monopoly over money and credit creation (debt holders--think gov't, bankers-- leverage abilities, execs--labor wages) that we see them able to shift the bulk of the blame elsewhere while claiming that their failure was not regulating enough.