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April 16, 2020


Ralph Musgrave

“It also means protecting companies, because organizational capital and firm-specific human capital are valuable assets. Contrary to the simple-minded Econ-101ers, capital and labour are not fungible.”

If companies are not protected, capital and labour do not need to be fungible in order for a quick recovery post Corvid. E.g. if British Airways goes bust, someone will pay something for BA assets. Failing all else, I’d pay 1p for the billion or so dollars worth of aircraft (out of the kindness of my heart). BA’s shareholders and bond-holders are wiped out, of course.

Then come the recovery, I’d set up a new airline “UK Airways”. I’d re-hire all the old BA pilots, flight attendants etc. Hey presto: I’m the proud owner of a billion dollar corporation which cost me 1p.

It’s amazing what free markets can do when the would be economic planners stop interfering.

Robert Mitchell

"unemployment is a source of much misery."

This is ergodic thinking, using a generalized representative agent to eliminate those of us who become suicidally depressed at work. We are completely eliminated from your model. We are silenced, ignored, marginalized. Will you delete this post, to keep your model plausible?


«In the 2008 crisis, for example, some opposed bank bailouts fearing a moral hazard problem. But they were applying normal times thinking. What mattered much more was keeping the financial system alive.»

This is the purest "centrist" propaganda: keeping the financial system alive is a very different thing from keeping the existing financial system management, spivs and frauds all together, in their comfy positions of rent.

I would have been quite easy to keep the financial system alive by moving the back offices of exiting banks into new banks and simply lopping off the failed management layers of the existing banks.

In practice the USA and UK governments did not "keep the financial system alive", but bailed out property speculators, finance conglomerate management, and other "leaders" of the debt/sell-side lobby rolling in the money, and well away from any embarrassing criminal investigations.

The same should have happened now to the management spivs and frauds who very determinedly did not build reserves or pay for insurance to cope with even a few weeks or months of bad business, because they wanted to distributed more of company earnings to themselves as bonuses and stock option repurchases.

In practice those management spivs and frauds decided to run their companies by grossly under capitalizing them against risk, knowing that if they needed capital, their mates at the BoE and Treasury would give them grand handouts.

The usual: private gains and public losses, a 50-50 mixed economic partnership :-).


I’d pay 1p distributed more of company for the billion or so dollars worth of aircraft



In “Skin In The Game” Taleb explains why many Roman aqueducts are still standing after 2,000 years. It’s because the Roman authorities made the architects live directly underneath them, so they’d be the first to die if the structure collapsed.

I think lack of “Skin In The Game” is a key problem with banking malfeasance. Maybe we should require all contracts in the banking sector to include penalties as well as bonuses. Or maybe we need an equivalent sanction to the GMC having a doctor “struck off”.

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