This post is just to give you all a little more background on the chapters that I read from 13 Bankers. You all briefly heard and discussed about what the main concepts of the book were about, but because we were cut short I thought I would post an entry to try to get you guys to think about the ideas that were presented in the book.

Word Cloud of Sec Geithner Speech, Feb 2009.

We debated about whether or not the government should be responsible for bailing out the major banks. The options essentially are: Yes, bail them out because without them our entire financial system and economy will crumble, or: No, don’t bail them out. Why should our government be responsible for bailing them out and helping a system that clearly isn’t working. This is a situation that has no clear answer, but since we are in a crisis, the most logical and appropriate answer is to bail the banks out because without them, our economy WILL suffer more and we will essentially have to start over with nothing. In my opinion, morally I think it isn’t right that the banks can fail time and time again and continued to be rescued by the government, but practically I can’t see another way of responding to the situation.

Lehman Brothers Rockefeller centre
Image via Wikipedia

A lot of people ask how we got into this situation in the first place. Part of the reason is the structure of our countries entire financial system. Every modern economy needs a financial system, but the past two presidential administrations have decided on THIS one; a system that is essentially controlled by 13 major banks. By putting our faith and power into the hands of just a few people, it looks like we “put all of our eggs in one basket,” and have no diversification. There is no contingency plan for what will happen if they are to fail. If one fails, it affects the rest of them and then the entire system is in danger of crumbling. The government will try to prevent this from happening and the banks know that and take advantage of that by taking unnecessary risks that they don’t even end up paying the consequences for.

This brings about a point that we talked about briefly in class. Our system is controlled by those 13 major banks that are seen as “too big to fail.” Clearly they cannot fail because without them, what will we have? The “too big to fail” problem (TBTF) states that the main problem isn’t the actual size of the banks, but more so the interconnectedness of the banks. They are so connected with each other and additionally, the success/failure of the banks affects almost every other aspect of our economy. They cannot be allowed to fall into an uncontrolled state of bankruptcy (the domino affect that happened to Bear Stearns and Lehman Brothers). The TBTF problem creates 3 sub problems. 1) The banks have to be bailed out if they do fall. 2) The banks have incentives to take large risks because they will get bailed out if the risk is too large. 3) Banks are bad for competition, so they are bad for the economy. We put so much faith into the banks with no other alternative plan that it has sparked the question, “if banks are too big to fail, are they too big to exist?” It is dangerous to bank on (no pun-intended) this system working out with no contingency plan for what will happen if something major is to go wrong.

So what could have been done so that we didn’t find ourselves in this situation in the first place. I know it is hard to imagine, but we need to try to find other alternatives. It is not easy disrupting a system that has been used for decades, but given the current state of our economy, I would say that a change is needed. There are debates over whether or not to reinstate the regulations that existed during the 1930s as the economy was recovering from the Great Depression. Those regulations were in place for 50 years, and kept our economy stable during that time, so why not implement them again? Basically those regulations were lifted so that the banks could obtain higher profit margins, but I think it is time to stop helping the wealthy get even wealthier and impose regulations that will turn our economy around. Possible regulations now would be to regulate the derivatives market, which the banks frown highly upon. One thing that many agree upon is to increase the transparency of the banks so that we know what the inner-dealings of the day-to-day operations are, but obviously the banks are not a fan of that idea. Additionally, there are attempts to have the government exercise more control over the operations of the banks so that when they recognize that there is a problem, they can stop if there before the problem gets worse.

So to summarize what the book is saying in a sentence, yes, the government should bail out the banks, but changes and regulations need to be implemented that will change our financial system so that we don’t get into this situation again where they need to be bailed out.

What do you guys think? Should the government bail them out? They got themselves into that situation in the first place, so why is it their duty to jump in and rescue them time and time again. Do you think that the survival of our economy depends on the success of the banks? Is there an alternate method that we can use in which we don’t rely on the banks to have a thriving economy? Why does the government feel so obligated to involve themselves in the problems of the banks? What changes should be made to our financial system? Should we impose regulations?  What regulations would these be? Should the government have more control? Or should things stay the way they are? We depend on the banks and have agreed that they are too big to fail (hence the reason for the government continuing to bail them out), but if that’s the case, should we even allow something that big to exist? What is the right next step for us to make in order to try to get our economy back on track in regards to our country’s financial system.


27 responses »

  1. Jordi says:

    Lots of good points and threads to pursue here.

    One small one I want to add. You describe how we have had this financial system for decades. I think it is more recent than that. The key legislation was late 1990s. Gruver’s piece points out that OPM started in mid 1990s as well. Power can make organizations and actors have an aura that throws of sparkles and chimeras: they can seem eternal, all-seeing, near-omnipotent.

    I’ll hold off on the WWID till I hear from more of you all. [What Would I Do=WWID; not to be confused with WWJD!]

  2. brookeparker16 says:

    To bail or not to bail, that is the question. And honestly, I am not sure if I have an answer. I see both sides of the matter and have found myself having an internal debate as to which is right. Going along with Hannah’s point, if we did not bail out the banks our economy would have most likely spun into a irreversible hole which is why the government had to intervene. So since we did intervene we should focus on changing the financial institution to ensure that this does not happen again. As much as I understand and agree with this logic, I can’t help but think that government is preventing the free market from doing its job. A free market allows good businesses to succeed and bad businesses to fail. Maybe what the future of our economy actually needed was for these banks to fail and for a better system to “rise out of the ashes”. Perhaps regulations would not be a drastic of enough change to prevent something like this from happening again. Although, I would not be the one to have to make this harsh decision to essentially collapse our economy, maybe it would be better for us in the long run.

    • scoutberger says:

      I hate to admit it, but I believe that the banks had to be bailed out by the government. You have to face the question, “do you teach them a lesson and make the banks suffer the consequences or do you let the economy crumble to pieces so everyone faces the consequences?” Ultimately, I would love if there was a way for the banks to have repercussions without the possibility of the United States economy from collapsing; however, this is just not possible. If you bail out the banks you are basically rewarding bad behavior. That being said, I think it is more important to take care of our economy and the people of the U.S. than it is to punish those at fault.

      While I do think it was imperative for the government to bailout the banks, under no circumstances should this ever happen again. So yet again, another big question arises: how much should the government be involved in the affairs of the banks? On one hand you can argue that with more regulation and SEC attention we could avoid situations like this. At the same time, I hate to think of a situation in which the government is too involved. I completely agree with Brooke’s point that the government may be preventing the free market from doing its job. I don’t believe there should be an iron fist of regulation and the business should have the ability to control their affairs. As Brooke said, a free market allows good businesses to succeed and bad businesses to fail–I personally think that is a valid system.

      I wish I could provide some magical answer that could ultimately prevent disasters in the future while limiting regulation. However, it seems as if we will constantly be having the endless debate about too much and too little regulation.

    • hannahglos says:

      I think that a free market is a good idea as well, but won’t there also be massive risks if we just go back to a laissez faire approach? There really is no way to find out what will happen if we let the market do its own thing, and I think that is a bigger risk to take, and also one that no one is brave enough to try.

  3. Alex Lin says:

    Ultimately, I believe that the government needed to bailout the banks. Without the bailout, it is possible that the United States economy would collapse to a point where the country would need to build from the bottom up. However, the effects of not bailing out the banks would be felt by the whole world, as the U.S. GDP represented almost a quarter of the world’s GDP at the time(GDP in 2008: U.S. = $14.3 Trillion, World GDP = $61.3 Trillion).

    But reckless risk-taking of the banks does need to stop though. One step towards preventing this crisis from happening again is regulation. As Hannah said in her post, why not keep regulations that kept our economy stable for 50 years? I believe that the Gramm-Leach-Bliley Act of 1999 was the first step towards disaster. It basically removed the Glass-Steagall Act of 1933, which prevented commercial banks from merging with investment banks, insurance companies, and securities firms. This allowed banks to engage in businesses with a lot more risk and obtain higher profits. However, it also allowed banks to get to get leading to the TBTF problem.

    Reinstating the Glass-Steagall act could be a good start to preventing the “Great Recession of 2008” from ever happening again.

    GDP Data from Google

  4. Sarah says:

    I believe that government did what it had to do to keep the economy going. Obviously the pros and cons of both options had to be weighted and I think not bailing out the banks would have caused more harm than bailing them out. However now that we have bailed them out things need to drastically change. This needs to be the last time this happens and the government needs to make sure of that. Whatever regulations or policies that need to be put in place should be used so no banks will ever be in this situation again. In terms of what those regulations or policies should be, I am not sure. First I think we should look to other countries for ideas. Obviously the current financial structure that the US has in place is not working, so something needs to change. Not being a financial expert, I don’t really know what systems other countries use, but I feel like that would be the first place to look for alternative solutions. Maybe another countries system is working better and should be implemented in the US. I know the US has a massive influence on the world economy. I think I remember hearing that if the banks in the US had not been bailed out the rest of the world’s economy would have taken an even greater hit than the one it took with the bailout. Clearly if the whole world is influenced by 13 banks something in the financial structure and world economy is off.

    I like Hannah’s proposal of reinstating the regulations that were in place during the Great Depression. Although the banks are against them, I don’t feel they should have a say in the matter as they were the ones who had to be bailed out. They were the ones who were frivolously spending “other people’s money”, so until it is their own money on the line I don’t think their opinion really matters. I also think more transparency and government intervention with the banks could help the situation. Ultimately banks should not be allowed to get to the size where they are “too big to fail” because then if they fail, we all might fail again with them.

    • hannahglos says:

      Do you think that the banks should simply not be allowed to get to their current size so they are regarded as “too big to fail,” or do you think that they are “too big to exist” and should be stripped of their power?

      • Sarah says:

        I think banks right now are “too big to fail” and that makes them “too big to exist”. I think their power needs to either be drastically reduced or there needs to be an external party overseeing their actions. To help with the issue of power, banks need to be reduced in size. By making more smaller sized banks the power with be dispersed more evenly so the whole financial economy does not hang in the hands of 13 people. The reduced size will reduce power and as well as a banks effect on the marketplace. Therefore if a bank were to fail, everything would not come crashing down and the need for bailing them out would not be as imperative. This would also mean that banks would hopefully act more responsibly. They would not have the luxury of knowing that the government would bail them out if things went bad, because their failure would not have the same impact.

  5. Kate says:

    While I believe that the government made the right decision to bail out the big banks (not sure if our government could not have taken the risk based on our financial system), I am curious, to see how much more severe the consequences would have been if the government decided to let the banks fail.

    No one disputes that several banks were in danger of failing, but this does not necessarily justify a bailout. Failure is an essential aspect of capitalism because it provides information about good and bad investments. The banking sector inevitably failed because housing prices were too high and the housing bubble burst. By bailing out banks that make risky decisions, wealth was being distributed from the general taxpayer to well-off economic actors who profited from risky investments.

    Economist Jeffrey Miron also brings up an interesting point. Miron points out that if banks were to ultimately fail, their activities would not have entirely disappeared. Meaning, some banks would continue during bankruptcy and “possibly resume after the sale of a failed institution or its assets to a healthier bank” (Miron). He also argues that if banks merged before failing, it would prevent bankruptcy all together (Miron).

    While Miron’s ideas seem difficult to imagine, I believe that he brings up some very valid points. Our economy is slowly improving, but our country is still suffering from the effects of the recession and some companies are still continuing to fail after being bailed out. What was the worst thing that could have happened to the United States if our government let our big banks fail? How much more would our nation have suffered?

    Jeffrey Miron pdf:

    • Alex Lin says:

      I think Miron has several interesting points. However, I do disagree with one of his points. Miron states: “merger in advance of failure avoids bankruptcy entirely.” This would just create larger banks. Although it would be a short-term solution in the situation of a crisis, wouldn’t that just add to the banks being “too big to fail” later on?

      • Kate says:

        Alex, you bring up a great point. I am not sure if Miron’s idea would hold up in the long run. If banks were to have merged, I believe that the Recession could have been avoided for maybe a few more years. Unfortunately, banks probably would have continued to make the same risky investments that had made them so successful during the past decade. Unless the government realized that our financial system needed to be corrected during that time frame (which I doubt would have happened), our nation would end up in the same situation that it is currently facing now.

    • hannahglos says:

      An interesting approach that may or may not work would be to implement Miron’s idea once our economy has FULLY recovered. I don’t think anyone is willing to take a risk while our economy is so fragile, but once we are fully recovered and thriving like we used to, it might be beneficial to make a change that will prevent us from getting into another recession in the future

  6. Cheryl says:

    I’ve heard a lot of opposing ideas on this matter. Some people said it was the financial industry and the banks themselves that created the mess, so why not just let them clean it up? However, I believe that bailing out the banks was basically the one and only solution that government had. It all came down to US taxpayers rescuing the day, or the entire economy/financial system would collapse. From what I have seen, most people have assessed this matter from a consequentialist viewpoint. If we compare the possible aftereffect, the latter would obviously bear much more disastrous consequences. It would not just affect the US only, but the world economy as well, given that US is still the world’s leading nation.
    I think you brought up a great point regarding the “too big too fail” problem and the interconnectedness of the banks. They were so interdependent to the point that if one fails, others will very much likely to experience the dreadful domino effect. I believe this is one of the main roots of the problem. I really like your quote “If banks are too big to fail, are they too big to exist?” Obviously, banks must exist; we cannot have a financial system without banks. Nevertheless, what is the whole point of letting them become so humongous to the point of being able to manipulate the whole economy? Government must do something about this. It can be more regulations in the financial market, or more transparency within the banks. Ultimately, they should not have been allowed to become too big in the first place.
    Of course, more regulation means more stability. Obviously, there is a trade-off between competition and financial stability. Is stability so big of a concern that it should override the issue of competition? In contrast, will regulations to restore financial stability lead to the distortion of competition in the industry? I think in the time of crisis, stability should be our top priority. Once we have survived through it, that’s when the government needs to think about how to strike a balance between competition and sustainability. After all, the last thing we would want to see again is the government charging the taxpayers of the country for the greed of the banking industry.

  7. Paul Martin says:

    On the whole I agree with what everyone has been saying so far. It seems that the general consensus is that while clearly something is not working in our financial system, at the end of the day it was necessary for the government to bail out the banks. However, just because it was necessary, doesn’t mean that it should ever happen again, and steps must be taken to ensure that. I fully agree with Brooke’s comment that the government seems to be stifling the natural order of a free-market economy. I consider myself to be fairly aligned with a libertarian perspective on government involvement, and while I understand the need for government regulations, I would prefer less government oversight. The problem with this is that the government currently only has one foot in the door, and either needs to step in or get out. In my opinion, there should either be no regulations and the banks should be forced to deal with the consequences of failure, or there should be strict regulations to ensure that they don’t fail. Currently, the government has a half-assed approach to a system which clearly is not working. I agree with Alex that the obvious tipping point was the Gramm-Leach-Bliley Act of 1999. Despite my personal penchant for libertarianism , I would be willing to see the institution (and re-institution) of some relatively simple regulatory measures.

  8. In my opinion, the government had only one option, which was that they were forced to bail out the banks. Paul proposed the idea of either letting the banks to run their own course and face the possibility of failure or have a intensive regulatory system implemented by the government. I feel as if a hybrid of both of these ideas can exist . By no means am I a big fan of government intervention, but having the current system fail showed its instability. And as many of you have said it, maybe capitalism just needs to run its course, where the weak are eliminated and the strong survive. If this were to happen, I feel as if this pattern would continue on forever. I think the best answer to this situation would be to have a limited “big-brother” approach, where the government would be able to step in and monitor the banks’ inner workings whenever they felt that the situation was becoming to risky. I think if the government was able to intervene quicker, then maybe we would not be in this situation to begin with. In regards to the system I am proposing, it would be very similar to the color scheme that the “Homeland Security Advisory System” is using, except the word terror would be replaced by the word “investments” and each label of a risky investment would be backed by a quantitative value that could be measured/calculated. (I am not big advocate of the Homeland system, because although it looks simple, no one really knows what the difference between high risk or sever risk of terror really means). This would allow people to better understand the level at which our economy is, and if the need for government intervention is really justified, i.e. if the chance of risky investment were moderate, but the government tried to overstep its boundaries and intervene then the banks could have the right to make the appeal at court. I am still a little skeptical of this idea myself because there is no real way to measure its success rate, but I think it best answers the power struggle that I foresee the banks and the government having.

  9. Connie says:

    Like everyone has already mentioned, I think that the government really had no choice but to bail out the banks in this situation. In a financial crisis of this magnitude, the people of the United States turn to their leaders for guidance. Will the government let the banks crumble; thereby, leading to economic chaos? Or will the government swoop in to bail the banks out, offering some hope for an economic turnaround? Regardless of which decision the government would make, they would surely get flak. Therefore, I think the government took the necessary course of action by bailing out the banks. But then it brings up the question of how many times can the government do this before the government bailing out the banks BECOMES the contingency plan?

    I came across an interesting article with regards to the bailout money given to the banks on the Wall Street Journal website: According to the article, fewer than 5% of banks receiving government aid has responded to a survey about what they’ve done with the money. This is extremely alarming to the government and the people of the United States. After reading the OPM article, it concerns me what entities do with money that isn’t theirs. This just reinforces the point that there needs to be increased transparency between banks, the government, and society. Without surveillance, it’s worrisome what people do; thus, I think what the government really needs to do is enforce some sort of regulations to improve transparency.

    • hannahglos says:

      I completely agree with your question of how many times the government can bail out the banks before the banks become our contingency plan. That is why I think that there should be regulations reinstated so that we don’t find ourselves in this situation again. On a different note, that statistic from the article is shocking! The fact that 5% of the banks have responded to the survey proves that there is such a lack of transparency in the banks. Clearly the banks are taking advantage of the aid that has been given to them and will continue to abuse the system for as long as they can.

    • Jeff Galloway says:

      Just like what Hannah said in response, your question about how many times the government can do this is the key. I agree with everyone that the government had no choice about a bailout, even though morally I disagree. But if the system is clearly not working and giving us one failure after another, when is enough enough? What if this keeps happening, except next time it’s worse? Then worse again? This was already the worst recession since the Great Depression, and if the these recessions keep getting worse then we might as well let the banks fail, because we’ll almost be starting over anyway.

      Of course, maybe the recessions won’t get worse. But it’s worth asking what we will eventually do if they do worsen.

  10. Lindsay S. says:

    I do agree with the consensus that it was necessary for the government to bail out the banks. However, something that has not been brought up yet is the fact that the government let Lehman Brothers fail. I personally believe that that was one of the worst decisions the U.S. government could have made. I understand that the government is not responsible for the decisions a corporation makes and for fixing their mistakes, but in terms of the global economy, the collapse of Lehman Brother was an absolute disaster. The money that the U.S. government would have paid to bail out Lehman absolutely would have been worth it in my opinion to prevent the extreme volatility and chaos that the global economy experienced as a result. It was after all Lehman’s failure that triggered the sheer panic in 2008. I realize that it would have taken a lot of hard work and creative solutions for the government to bail out Lehman, but I feel ultimately our economy would be in better shape as a result.

    • Hannah says:

      But is Lehman the only thing that triggered the downturn in 2008? Say perhaps that the government had decided to rescue Lehham Brothers before it collapsed, would we still be in the same situation that we are today or would we be flourishing like we were previous to 2008.

      Another possible outlook is that Lehman’s collapse might have been a “wake up call” to other banks. I still think that the banks are taking advantage of the control that they have on our financial system, but I also think that Lehman’s collapse helped them to realize that they are not in fact invincible.

  11. mwh011 says:

    It seems as thought there isn’t much debate around the thought that the banks needed to be bailed out. So, the big thing that needs to be discussed is, what should we do to avoid having to bail them out again? As you stated, there isn’t much deterring the fact that banks can take on a huge amount of risk because they will just get bailed out if they fail. Transparency legislation and regulation is greatly opposed by banks, but it might be time to stop thinking about bank’s interests and start thinking about helping society. Sure, regulation hurts profit margins, but to allowing them to incur huge amounts of risk goes against their societal duties. It is true that banks are ultimately a business, so they have to think about profits just as any business would. However, to many people, banks are a sense of security, and letting them take on huge amounts of risk without transparency to the public compromises that sense of security. While regulation policies may not be popular with the banks, it is necessary in order to ensure that they do not run of risk of negatively affecting people’s investments and the economy as a whole.

  12. marko987 says:

    I agree with Lindsay. My personal opinion is that the government should not let Lehman Brothers fail. If FED already decided to bail out Wall Street banks and AIG than they should have bailed out everyone. The fall of Lehman Brothers certanly contributed to even greater impact of recession. Lehman was considered one of those “Too big to fail” corporation that was interconnected with many smaller banks and companies. Also, why was Lehman Brothers so much different than Goldman Sachs? Why nobody let Goldman fail? Maybe because their former CEO Henry Paulson was Chair of Tresury at the time. Not to mention that Henry Paulson and Ben Bernanke were the one signing $700 billion bailout plan that didn’t include Lehman Bros.

  13. Jim says:

    I think we had to bail out the banks. I don’t think bailing out the banks represented the moral choice, but I think we had to do it and therefore I believe there are times in which we are obligated towards immoral actions. I think we found ourselves in a situation where justice would dictate allowing the banks to fail and the country to therefore feel the effects of a financial system run a muck, but from a practical standpoint it doesn’t seem fair to so adversely affect the lives of many innocent people. The situation has a similar form to a case we talked about in my ethics class called The Jim and Pedro Case. In the scenario, you (jim) are in the jungles of corrupt country and kidnapped by a militant leader (pedro) who forces you to either shoot one man or choose not so and thus cause the deaths of 20 men. The scenario seems outrageous and yet there are surely less severe circumstances in our lives in which we find that there seems to be no choice we could make (moral or not) which would leave our sense of morality unscathed. I think the financial situation we are discussing has the same form. We find it to be unjust to bail out the banks because it seems like we are letting them off the moral ‘hook’ yet doing so would cause serious detriment to the lives of many Americans, most of whom took no part in the financial wrongdoings. Either choice seems, in its own way, unjust and we are therefore left to pick what we find to be the lesser of two evils. I think we chose correctly.

    In more practical terms, I think that bailing out the banks is just one action in a series of actions that will right the situation and it starts with implementing some of the previous legislation which helped clip the wings of the financial industry.

  14. Claire McCardell says:

    Although I agree that the government needed to bail out the major banks for fear of our economy crumbling, I couldn’t help but wonder the long-term effects of these bailouts. We have an enormous national deficit and were recently down-graded by the credit agencies, and I think that this additional spending in the form of bail-outs also has harmful effects on the economy. I guess it comes down to weighing the lesser of two evils–the immediate disastrous effects of not bailing out the banks, or the long-term effects of a massive national debt.

    Now that the banks are bailed out, we clearly need to start considering changes or regulations to prevent this from happening again. I think the biggest problem is that we’ve had this current financial system for so long that any system changes would result in an entire un-doing of our economy; instead, I think we should brainstorm regulatory changes for the future to eliminate this interconnectedness and consolidation of power among the 13 largest banks. I think we’ve started to make progress by passing legislature such as the Sarbanes-Oxley Act, which requires more transparency in corporations. By increasing transparency, the investing public and government will be able to detect unethical behavior sooner and provide the incentive to conduct their processes honestly and for the benefit of the shareholders. Additionally, I think another major issue that is especially problematic for the banks is the interconnectedness of our financial system. The ability to purchase debt and equity of other corporations or banks creates links within the economy, which results in a domino effect when one corporation suffers. Furthermore, the ability to trade other corporations’/banks’ debts and stock shares shifts focus away form core business operations and toward sales and trading. A prime example of this is Enron, which started off as an oil and natural gas company, but expanded into commodities trading, which progressed into unethical behavior to maximize profits from trades. All in all, I think that the government made the right decision by bailing out the banks, but now we must look forward to ways to break up the interconnectedness and opaque-ness of our economy’s major corporations and banks.

  15. Mike says:

    I think our country has been heading in the wrong direction for the last decade or so. I don’t believe that we should let the free market completely run its course, but the increasing regulations and control from the government seems to be failing. This subject made me think about an graph that I was shown in one of my classes, Sustainable Development. I cannot figure out how to add it in a reply, but it basically showed the relationship between economic freedom and wealth -> more freedom = more wealth. Like the many communist countries that redeveloped their economy to a capitalist one in the late 80’s, maybe it is time for us to start from scratch and rebuild our economic system. Although it is a tough decision to make (everyone would have to struggle until the system re-balances) it seems that this is where we might be heading anyway. We can not say we are capitalist today with the government taking partial control of GM, Chrysler, the health industry, and now the banks. Where are we heading? The United States is too proud to resort to completely redeveloping our economy/government structure, but with a $15 trillion deficit, how can we say we have a working system? Maybe it is time to “cash” out and return to the basics of capitalism where people/companies are responsible for their own mistakes.

  16. Jordi says:

    So, to sum up what I was saying in class.

    1) The financial sector provides a core infrastructure: depositing and credit. Like roads and powerlines and, I would say, the Internet, infrastructure is a kind of commons. We all value from its prosperity and also face incentives to misuse. As an infrastructure, there is a stronger claim for a more regulated place in the economy.

    2) Not allowing there to be financial institutions big enough to threaten the overall financial system seems like a worthwhile goal for public policy. How to do it is not clear. Meanwhile, the financial sector will resist and mightily.

    3) The government, regardless of who was in power, missed many opportunities with Wall Street to make conditions on the rescue money. That window of opportunity is shut now and s any political changes to break up the 13 bankers oligarchy is harder to do.

    4) One kind of solution is to allow banks to fail, but in a more controlled fashion. Here is some coverage of what Iceland did. And Sweden.

    5) Since the housing price collapse triggered all these problems, why not look into stopping that slide? If the prices stabilize, then the run on the financial system, which was holding too much debt on houses, would have abated buying time for the leveraging to be deleveraged.

    6) Pay regulators in government what the comparable person in the regulated industry makes. More money for government bureaucrats? Sure! It is cheaper than a global recession.

    7) I am with Marko. End the conflicts of interest between business and government.

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