The system that exists now does not discriminate between success and failure, but volume. This is why as many terrible bets were placed with other people's money as there were; it made a ton of a lot of money for those working at the clearing houses financing the deals, loaning the money, doing the trade. There was ZERO regulation. In fact, there was neptotism between those charges with ensuring a fair playing field and those tilting the field, and there still is. Roubini and Taleb are spot on. Fire all people currently in office overseeing banking and equity markets (ask Meredith Whitney to serve as the head of Treasury), nationalize the big banks that are already insolvent, so that people know they are just a zombie to put your money if you need a guaranteed checking or savings account, and let the mofo burn. It's noon on Tuesday and there's another TRILLION dollars Geithner announced he wants to use as a TARP-like method of buying bad loans in consumer credit, etc. markets. A trillion here and a trillion there and soon you're talking real money.
Idiot. In the "free market" ideal, banks simply issue bank notes of their own and prosper based on their own fiscal competence & reputation. People would tend to be smarter & more self reliant when it comes to finances, instead of always looking for Big Brother to answer for them. It's funny how the free market concept went from government being hands off to government running the banking system. All because Nassim Taleb suggested so. Yeah, quite a group of free thinkers you guys are, lol.
We just had that free market concept. CDOs. It did not work too well. Not to many people want the gov't involved with money - but we are not happy with the fed either. Perhaps you wish to put me in charge.
Some might argue you can't have and we didnt have free markets when the suply in money is at the mercy of a chosen few...
Perhaps you should put on your thinking cap and realize that a government chartered & mandated central bank (held by private hands), is far from free market banking. Very far. CDOs worked great, a little too great. For those that designed them.
Anaconda is the only person on here who is making sense. You people should all read the book "Mystery of Banking" by Murray Rothbard to understand what a free market in banking truly looks like. We haven't ever had one....although prior to 1913 we had something closer to it. In a true free market each bank can issue its own currency and depositors keep the banks in check by monitoring the amount of reserves they have. And by the way, in response to another stupid thread on ET, there's nothing wrong with fractional reserve banking...it occurs in a truly free market but the reserve 'pyramidying' by banks is limited by competition from other banks who hold higher ratios of gold and silver (or pick your commodity). Austin
How about for instance the tulip mania? Was there an elite suply control of tulips all the way down to the bust or perhaps it was just human nature chasing it's own tail in just another story of men's greed with a predictable ending...
This is so fundamentally true that it's depressing to realize how radical it will sound to many, many people. At this point it does not appear the incoming administration is any more capable of acknowledging the realities -never mind actually dealing with them - than the administration that just vacated the Big Chair. Unfortunate, probably inevitable, but still a little disillusioning and more than a little frightening.
That is a technically correct statement that still IMO manages to miss the mark entirely. Nationalizing the banks simply replaces the current free market banking inefficiencies - which are absolutely enormous - with bureaucratic ones. Until someone can demonstrate that free market banking is particularly efficient (quite the challange, that), there is no introduction of fresh inefficiencies, it is merely swapping one set of them for another.
If funds like Lahde Capital, Paulson Company, Balestra Capital, Haymen Capital all make money because they see the bad risk and bad bets the banks made, why the smart people who work for banks and responsible for bank risk could not see how the risk they took of selling subprime loan package with AAA rating would destroy them in time? What I am saying is if some people could see how bad risk/reward was, why not the bank people?