Too big to fail,to fix or not?

Discussion in 'Economy' started by sjay, Jul 25, 2012.

  1. sjay
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    sjay Active Member

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    My first inclination is to separate commercial and investment banking so we don't have to repeat future bailouts of too big to fail.But it seems if that's done then we won't have banks big enough to compete for global financing. I would like opinions on this,but please keep the partisan politics out,which manages to ruin about 80%of the treads.
     
  2. eflatminor
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    eflatminor Classical Liberal

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    My first inclination is to end the federal reserve and allow banks to compete in a free market. If you don't like them engaged in commercial and investment banking, do business with another bank. You'd have choice without the current ultra-cronyism that is today's banking market.
     
  3. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    would you like to keep partisan politics out of our country and voting booths too??? Democracy is partisan political debate! and its always been a debate about freedom versus government.

    it is 100% meaningless to say partisan politics ruins threads when the central issue of our time is the partisan political battle between freedom and government.
     
    Last edited: Jul 25, 2012
  4. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    1) I've seen no evidence of this

    2) you could break them up under anti-trust logic and satisfy even conservatives in many cases

    3) you could not worry about it as long as there is a good living will in place with specific procedures for an orderly funeral in the even of fatal, untimely death.
     
  5. waltky
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    waltky Wise ol' monkey Supporting Member

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    'Too big to fail' causes markets to fail...
    :eusa_eh:
    Bernanke: Too Big To Fail Means 'Market Is Not Allowed To Work'
    August 7, 2012 – Federal Reserve Chairman Ben Bernanke said that large financial institutions that were too big to fail and needed government bailouts were bad for the market because the presumption of a government bailout meant that “the market is not allowed to work.”

     
  6. expat_panama
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    expat_panama Silver Member

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    Sounds vague.

    Regulating banks requires actually looking them clearly and coming up with specific law changes. What we're getting from the old time news sources is mindlessness complaining. Sure, lot's of morons pay for that crap but it won't regulate banks. If you've got a specific law change for correcting a specific problem, then please share. The economy is important and good input's always needed.
     
  7. martybegan
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    martybegan Gold Member

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    To me, the 2008 financial crisis was a unique event in history, caused by the phenomenon of marketization of mortgages into securities.

    The underlying issue was that, unique to finanical investment, the situation created was one in which EVERYONE was winning. Usually in speculation and investing there are winners and losers. People selling stock short, then getting screwed when the price goes up. People betting on the scarcity of a commodity (think Trading places) and losing money when the prices actually falls.

    With Mortgage Backed Securities EVERYONE was winning. The new homeowner won because he got access to a house he/she previously couldnt afford. The real estate company made money on the increasing costs of houses during sales, the mortgage company made money in selling the bundles of mortgages, local governments made money on the increased property taxes, securites firms made money on the comissions selling the MBS's, Insurance companies like AIG made money on the default swap fees, and the federal and state governments made money on the increase in corporate and personal income taxes.

    Everyone made money, but the good times were based on the assumption that housing prices would keep going up, demand would remain stroing, the homeowner could afford the mortgage they got, and any downturn would only be short.
     

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