Agreed. Thru the consolidation of myriad smaller banks throughout the 1990's-2000's and the repeal of Glass Steagall and regulatory capture, etc, etc...the TBTF entities are holding all the cards. Piggybank talks about standard practice lending vs highly leveraged non-transparent derivatives bets as if they are on equal footing...I think that's a ridiculous argument.
Ricter, if its a one world currency or some other 'we're all in this together' idea, you should be able to tell that I personally will disagree. the solution is to let the big boys stand on their own like the rest of us.
Perpetual world wide debt forgiveness huh? And the next time everyone owes money they can't pay...and so on and so forth... Wouldn't that make paper currency worthless in the end, not that it isn't already.
Exactly. And the fewer the players, the bigger the risk as it's concentrated amongst a select few behemoths. The shit I'm reading around here sounds like the kind of fluff I read prior to 2008.
I did not state they were on equal footing or imply it.. I just lumped them together under 'speculation'. Would you disagree with that?
Seems pretty obvious. If we're going to allow banks to be that big then we must regulate them so they don't do stupid stuff and crash the economy like they did. If banks stay below a certain size then they can have more freedom but no bailouts would be allowed. Anyone who thinks we should have just let the banks fail must be ignorant of how dire the situation was. But most of these folks don't even think that far. They just see a business being saved from their own stupidity. That Mitt would have no problem with a large corporation screwing-over the little guy is no surprise.
It really depends on the type of lending I suppose. The problem is that so many things have changed in ways unimaginable from 10-15 years ago that I'd bet it would be near impossible for these banks to even remotely model how certain loans would perform under various scenarios. In that case, it would fall under "speculation"...still conservative lending is what a depositor bank "should" be doing. Investment banks have a different profile.
Then we disagree, because if letting a "big boy" fail, for the sake of ideological purity, means that tens of thousands or more will lose their livelihoods or worse, then it's not worth it. It's just the mirror opposite of totalitarian Marxism.
This is where we meet the fork in the road. It's crystal clear to me that all of the regulatory changes in years past were designed to create the handful of TBTF institutions so as to provide cover for umpteen "overt" and "covert" bailouts. The lobbyists write all of the legislation anyway so any "regulations" will have a gazillion exemptions. Unfortunately, we are years past any meaningful change to what now exists. Realistically, this cycle will just continue to play itself out and I'm just trying to get an idea at what point the "ideological response" of "we can't just let them fail" will finally meet its timely end.
We might still be on the same trail, perhaps it's a bit overgrown. I agree with you. In my opinion, cut 'em down to size, but don't kill the host. Or, it's better to stop the snowball's rolling before it becomes an avalanche.