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13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
Very scary. One of the questions, though, raised a very interesting point: "Even if we broke up one large bank into ten smaller banks, couldn't the same sort of thing happen anyway, except that now we have ten banks in trouble instead of only one?"
That's a paraphrase of the question, but it does raise the point that simply downsizing an institution may not substantially improve the "too big to fail" issue.
So where does that all leave us? I'm not sure that you can regulate financiers out of stupidity.
Reply to @Old_Joe: We either continue to bail out banks when need be or let them fail. Banks have failed before. Whether or not major banks will be allowed to fail again is questionable, which - to any rational being should be incredibly upsetting. Europe will probably not be allowed to crack either, despite the fact that the underlying situation has really gotten no better.
We'll probably have another crisis soon enough, and the banks will be bailed out because they'll threaten financial armageddon if they aren't, and people will go along with it ("Won't somebody think of the children!" Yep, they are going to think how to give them yet more of the bill.) The banks haven't learned a thing from 2008 and you have a financial system now absolutely addicted to easy money. A hint of no QE anytime soon and what was an escalator ride up becomes an elevator ride down.
Even..................even if the banks could be reverted back to investment bank (their money is at risk) split away to an old sytle traditional bank that were not allowed to be involved with investments into the dark side; if not regulated in some fashion the investment banks could still take the system. The old brain cells are not what they used to be; but my recall is that in particular for Brazil, some bright folks from the U.S. found that country willing to rework its banking system which had eaten the monetary system and the citizens alive for many decades. At least some banks with non-standard investments had their own captial and their investors capital at risk, and the gov't. would not step in to help. As apparently there are not any criminal circumstances that have arisen from the 2008 melt, we are stuck with what we have, eh?
Comments
That's a paraphrase of the question, but it does raise the point that simply downsizing an institution may not substantially improve the "too big to fail" issue.
So where does that all leave us? I'm not sure that you can regulate financiers out of stupidity.
We'll probably have another crisis soon enough, and the banks will be bailed out because they'll threaten financial armageddon if they aren't, and people will go along with it ("Won't somebody think of the children!" Yep, they are going to think how to give them yet more of the bill.) The banks haven't learned a thing from 2008 and you have a financial system now absolutely addicted to easy money. A hint of no QE anytime soon and what was an escalator ride up becomes an elevator ride down.
The old brain cells are not what they used to be; but my recall is that in particular for Brazil, some bright folks from the U.S. found that country willing to rework its banking system which had eaten the monetary system and the citizens alive for many decades. At least some banks with non-standard investments had their own captial and their investors capital at risk, and the gov't. would not step in to help.
As apparently there are not any criminal circumstances that have arisen from the 2008 melt, we are stuck with what we have, eh?
Regards,
Catch