Can You Die From Lack of Sleep? Slate
James Lull, Ponzi Scammer, Drives Truck Off Cliff The Day Of His Sentencing Huffington Post
Debunking The Notion Of Too Big To Fail Barry Ritholtz
Japanese Housewives Back in the Game? Japan Economy Watch
Europe in deepest recession since War as Germany suffers Telegraph (hat tip reader Dwight)
Faith-Based Economics John Mauldin
Proving Me Wrong Michael Panzner
The Exuberance Glut Or The Dollar-Euro Short Squeeze Race Tyler Durden
Antidote du jour:
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YS:
Thanks for the Kemper interview. UMB is a small bank with $10 billion in assets and $1 billion in equity, roughly the 10% figure I think reasonable. It didn’t get into trouble. Why? Apparently it never got involved in products its management didn’t understand, following what I call the “small banking” model. Would Citi offer Kemper its presidency? Would he take it?
YS:
UMB’s loan to deposit ratio is 55%. This is a conservatively run bank.
Joe Costello, referring to yesterday’s FT article on banking.
This article commits the historical heresy of looking at what came to be, that is centralized money, as inevitable or the best outcome. This is made clear in his statement, “Jackson would still disapprove of the very quality we most prize in the Fed.” “Who’s “we?”Thank you for your comment on this article that points out something that could be a propaganda piece meant specifically to ’embed’ this claim of “we” that is consistent with the Fed’s strategy to demonstrate to bankers the world over that it is independent of politics:
“… in his appearance before Congress, Bernanke revealed with a single word who really runs the United States: Senator Sanders: “Will you tell the American people to whom you lent $2.2 trillion of their dollars?” Bernanke: “No””
Some of that $2 trillion certainly found its way into favored congressional districts. Something has purchased the Congress beyond the usual campaign funding.
The piece appears to employ the linguistic cleverness utilized in the strategy of the last 30 years to ‘lobotomize’ ‘we’ the people by erasing memory and sowing enough confusion to prevent debate.
LeeAnne:
How right you are.
Barry is right to debunk the “too big to fail” propaganda. This propaganda combined with Greenspan and the bnaking industry’s asssumption that the industry was capable of “self-regulation” combined to make a particularly lethal Molotov Cocktail to the US economy. You see, too big to fail meant the banks became implicitly guaranteed by the US govt, or GSE’s. And once they became implicitly guaranteed by the govt, well, then, under the new “self-regulation” regime they could all sorts of recklessly insane self-destructive behaviors, as they ultimately had the govt, i.e. the taxpayers to backstop their chicanery.
No, “too big to fail” is a paradigm that must die. That has to become one of the lessons we takeaway from this crisis. if the banks knew they would become worm food for their reckless behaviors, they would have been much more prudent under the auspices of Self-regulation
In general, I agree with Kemper, but I don’t agree that size doesn’t matter, only complexity. It is only the size, number, not complexity, of the holding companies, that makes them TBTF, and the amount of money that depends upon them. If the HCs were smaller, then bankruptcy could be allowed to work itself out, no matter how tediously complex. After all, the FDIC is currently seizing smaller banks, and other financial concerns are going bankrupt.
My answer is narrow/limited banking, precisely because I don’t want the bedrock of our financial system resting on regulators perceptions to any great degree. You can rely on that if you have a solid base to fall back upon.
The small banks have a good gripe because, strictly speaking, they’re on the hook for the FDIC. They’ll be taking a big hit before the taxpayers do as regards the FDIC at least.
You cannot get away from the concept of “Too big to fail”, if that means that the government would sit idly by during debt-deflation. I cannot imagine that in any real world scenario. In that sense, I think we’re fooling ourselves about fixing the system to avoid that.
Don the libertarian Democrat