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March 09, 2009

Comments

Jonathan

'Bank crises happen for the same reasons that government fails - because all organizations face problems of limited knowledge, bounded rational and inadequately designed incentives'
Agreed but with a libertarian bent. I strongly recommend a recent book by Hulsmann http://mises.org/books/moneyproduction.pdf
If money lent represented foregone consumption by another, (mad idea in a fractional reserve banking world), we could not have bank runs en masse.

kinglear

... and greed....

Blissex

From a debate in 1997, a debate that says it all:

http://www.derivativesstrategy.com/magazine/archive/1997/0597rtbl.asp
http://www.derivativesstrategy.com/magazine/archive/1997/0597qa.asp

This fantastic quote about the perils of the USA imitating UK self regulation (it happened of course thanks to prof. Gramm):

«Avoid the British experience. As the professional market legislation also proposes, U.K. regulators concentrated on the politically correct goal of protecting small punters, leaving professionals to their own devices. Knowing the relevant history, a U.S. politician worth his or her salt should wonder if the Conservative government's approach to market oversight has something to do with the number of Tory resumes on the street, and if a vote to duplicate U.K. market regulation communicates this disease, brought on by a rapid succession of Barings, Morgan Grenfell and Sumitomo problems, to name a few. British regulation, now recovering and making adjustments, failed not only to protect the public from the industry, but the industry from itself. Not a good idea in the United States.»

Andrew Duffin

"If banks operated in a free market, they would also have had to stop lending as their assets became worthless."

Well yes, but that is exactly what Dr. Butler thinks should happen, so it is not exactly a problem with his argument.

You might argue that the consequences of that would be even worse than what we have now, but you didn't make that argument, so I am not going to tilt at the strawman.

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