Jim Grant-The best financial reform? Let the bankers fail

[jtabeb]

Yep!

"The trouble with Wall Street isn't that too many bankers get rich in the booms. The trouble, rather, is that too few get poor -- really, suitably poor -- in the busts. To the titans of finance go the upside. To we, the people, nowadays, goes the downside. How much better it would be if the bankers took the losses just as they do the profits."

http://www.washingtonpost.com/wp-dyn...042204208.html

[vinoveri]

Re: Jim Grant-The best financial reform? Let the bankers fail

Yep!

"The trouble with Wall Street isn't that too many bankers get rich in the booms. The trouble, rather, is that too few get poor -- really, suitably poor -- in the busts. To the titans of finance go the upside. To we, the people, nowadays, goes the downside. How much better it would be if the bankers took the losses just as they do the profits."

http://www.washingtonpost.com/wp-dyn...042204208.html

uh, well yeah, a duh, isn't this what we (I know I was) and a lot of other more well known folks were saying about 18 months ago ... to wit "privatizing the gains and socializing the losses" is bad policy ? What's new in what Grant is saying (other than it is he saying it?)

[jtabeb]

Re: Jim Grant-The best financial reform? Let the bankers fail

Saying it in public.

[Munger]

Re: Jim Grant-The best financial reform? Let the bankers fail

The problem is that one can say this all one wants, but when TSHTF no politician is going to let the economic system collapse if he thinks he can do something about it via bailouts -- most simply because that politician would be putting themselves out of a job and possibly out of existence. It's like trying to make a credible promise that you shouldn't be required to pay for health insurance because if/when your son/daughter/wife gets cancer you will pay the piper, refuse treatment and let them die. It's BS and everyone knows it.

I don't know about Mr. Grant, but many of those making this argument know that big players will always be bailed out in the end if the system would crash otherwise; and they are using this argument to derail doing anything that would actually be effective at making these players not systemically virulent.

[radon]

Re: Jim Grant-The best financial reform? Let the bankers fail

The problem is that one can say this all one wants, but when TSHTF no politician is going to let the economic system collapse if he thinks he can do something about it via bailouts -- most simply because that politician would be putting themselves out of a job and possibly out of existence. It's like trying to make a credible promise that you shouldn't be required to pay for health insurance because if/when your son/daughter/wife gets cancer you will pay the piper, refuse treatment and let them die. It's BS and everyone knows it.

I don't know about Mr. Grant, but many of those making this argument know that big players will always be bailed out in the end if the system would crash otherwise; and they are using this argument to derail doing anything that would actually be effective at making these players not systemically virulent.

This is why they need to be broken up. Without the fear of failure markets cannot function properly. Players will chase yield regardless of risk because there is no motivation to be responsible, and more regulations won't change that. Speaking of regulators where were they in the 90s when the bank consolations that produced these monsters were so fashionable?