Wall St to get away with it again, world waits for next meltdown, Yi spooges

[Tamas]

I love Tamas's attitude. He is effectively saying that because people are corrupt and will try to bend and/or evade rules if given an opportunity to do so, we should have no rules at all. This is so refreshing in its stupidity.

It's as refreshing as a stroll through the landfill.  Libertardianism on the Internet is a very old and tired phenomenon.

This is not about libertarianism, it is about common logic. How should I word this to avoid immediately dismissed as Not Approved By the Democrat's Latest Memo?
Let me give it a try.

It should not be far fetched to assume, that the chief lawmakers, the leaders of the Federal Bank, and the high echelon of the financial sector constitute roughly the same circles, same aristocracy, if you will. One finances the other, the decisions of one group greatly influence the work of the other, and both group  (financial regulators, and financial "actors") can put great pressure on the other one.

Common interests, together with the mutual possibility of destroying or at least greatly inconveniencing one another, at least on a personal level.
Why is it impossible to assume that these two groups would meet on a middle ground that would benefit both, possibly at the expense of the other influence groups who are only indirectly attached to these two? (lets call them taxpayers).

Yet we are fine with such a closely knit bunch determining the rules by which they play. In fact, I am getting attacked as a blasphemer for suggesting it might not be the best of ideas.

Why WOULDN'T they "corner the market" in their own advantage? In which other similar situations we know about, especially considering the stakes at play, where selflessness prevailed?

Why should we not strive for rules and regulations which -at the expense of more regular shocks to the financial players- allow the dissolution of the status quo? Ones which punish recklessness not by spending tax money on keeping the reckless ones in business, but by letting them destroy themselves, and yes, maybe everyone else who joined them for their little joyride?

[Tamas]

Right, that's what I said.


There are rules, and there are rules. Just because we need laws and rules, it doesn't mean that anything labelled as a rule regulating something, is automatically good.
I could do Marty's fucked up twist and say he supports the oppression of gays in muslim countries, because he doesn't want to let people question laws and regulations.

No, your argument is as if I was arguing that we should do away with laws against rape and pedophilia because in some countries they are used to persecute gays.

No. I am arguing that there can be laws and regulations which despite labelled and advertised as such, are not made to benefit society as a whole, but instead of the power groups able to directly influence their creation.

THAT is what I am saying, everything else is BS made up by you.

[Razgovory]

So what sort of a plan of action are you suggesting?

[Tamas]

So what sort of a plan of action are you suggesting?

Regulation should concentrate on punishing misconduct, instead of going several steps further, conserving the status qup. This should be in an effort to create a level playing field, where established big fishes can go bust.

I am fully aware this is not easy, but even having it as a guiding principle would be a step forward compared to the seriously non-level field we have now.

[Razgovory]

Isn't punishing misconduct preserving the status quo?

[Viking]

They're not at risk.  They're insured by the FDIC.

As long as you don't put your money in an Icelandic bank. 

All the depositors did get their money.. it just took a while...


So depositors insurance means that depositors get crappy fixed returns while the institution uses their deposit as leverage to make high risk investments giving the institution very high returns, these investments are so risky or of unknown risk and put the entire financial system at hazard.

OK, so it's either get rid of depositors insurance or a strict glass-stiegle type separation of band and hedge-fund?

[Tamas]

Isn't punishing misconduct preserving the status quo?

Can be quite the contrary, in fact.

[Martinus]

So what sort of a plan of action are you suggesting?

Regulation should concentrate on punishing misconduct, instead of going several steps further, conserving the status qup. This should be in an effort to create a level playing field, where established big fishes can go bust.

I am fully aware this is not easy, but even having it as a guiding principle would be a step forward compared to the seriously non-level field we have now.

What does this even mean? This is a collection of platitudes.

[Razgovory]

Isn't punishing misconduct preserving the status quo?

Can be quite the contrary, in fact.

Can be, but rarely is.

[HVC]

This thread went weird, but minsky agreed with me and that's all that matters

[Sheilbh]

I broadly agree with Tamas. Regulation is very often used by big business to stifle competition, which is inevitable given that they have far more input in writing the regulations than smaller companies.

We probably differ in that my view is that we should be far more aggressive in trust busting and break up the big banks, the utility and energy companies, and even tech firms like Google and Amazon.

Basically this:
http://blogs.telegraph.co.uk/news/iainmartin1/100217312/send-for-teddy-roosevelt/

[The Minsky Moment]

It should not be far fetched to assume, that the chief lawmakers, the leaders of the Federal Bank, and the high echelon of the financial sector constitute roughly the same circles, same aristocracy, if you will.

That's pretty far fetched.
The head of the Federal Reserve is an ex college professor.
The Speaker of the House is a small business exec from Ohio, the majority leader a former real estate developer from Virigina, the minority leader a life-long politician from San Francisco.  The Senate Majority leader is a Morman who used to chair the Nevada Gaming Commission, the minority leader a Kentucky lawyer.  The banking committees in the two houses are led by former state's attorney for a rural county in South Dakota and a Texas farmer turned power company executive.

The common thread between these people is that there is no common thread.  America is not like France where there is an identifiable elite that all went to the same schools and have similar backgrounds. 

[The Minsky Moment]

So depositors insurance means that depositors get crappy fixed returns ?

Depositors get banking and transactional services as well.
Beyond that there is no compulsion for people to deposit money in a bank.  In 2013 America, there are plenty of alternative investment opportunities.

[Viking]

So depositors insurance means that depositors get crappy fixed returns ?

Depositors get banking and transactional services as well.
Beyond that there is no compulsion for people to deposit money in a bank.  In 2013 America, there are plenty of alternative investment opportunities.

So, why do "casino" (yes I know it is highly pejorative and not very accurate as a term) banks exist then?

[Admiral Yi]

This thread went weird, but minsky agreed with me and that's all that matters

You didn't pay attention.  He rubbished too big to fail.