Yearly Archives: 2013

Bill Black: Higher Bank Capital Requirements are Necessary but not Sufficient to Prevent the Next Crisis

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posed from Benzinga

The last ditch efforts to save Larry Summers’ prospective nomination to run the Fed and the comments about his withdrawing from consideration have prompted further discussions of financial regulation. The thrust of the comments is that Summers’ big regulatory idea was that capital requirements are the key and other forms of rules are worthless because they are easy to evade.

The last ditch efforts to save Larry Summers’ prospective nomination to run the Fed and the comments about his withdrawing from consideration have prompted further discussions of financial regulation. The thrust of the comments is that Summers’ big regulatory idea was that capital requirements are the key and other forms of rules are worthless because they are easy to evade.

It’s not only not a good idea, it’s not good because capital requirements can be gamed just like other rules.

What the Orgy of “Lehman Five Years On” Stories Missed

One of the reasons I haven’t weighed in with the obligatory Lehman five year anniversary piece is that so many of them are variations on a limited range of themes. So it may be more instructive to discuss the stories that it would have been nice to see instead.

Links 9/16/13

ObamaCare Staggers Toward the October 1 Finish Line (5)

By Lambert Strether of Corrente.

Tonight I want to focus on only two topics: First, the utterly supine nature of the AFL-CIO as led by Richard Trumka.* Obama can’t armwrestle Putin, and Obama couldn’t consummate his bromance with Larry Summers by installing Summers at the Fed. But by gawd, Obama can still whip Big Labor into line! Here’s the backstory from [sigh] Ezra Klein:

Yanis Varoufakis: Why Asymmetrical Monetary Unions Are Bound to Fail

Yves here. This post may strike some readers as a bit wonky and a bit too well-fitted to the woes of the Eurozone. Varoufakis argues that it has broader applicability. And consider: our Richard Smith has speculated that the US civil war was really the result of a strained currency union. I’m not terribly knowledgeable about the economics of 19th century America (I studied England and France during that period instead) but on a first pass, Varoufakis’ ideas appear to have some relevance for that period as well.

Ding Dong, the Witch is Dead, Summers Withdraws Name from Fed Chair Race (Updated)

I was just working on a post saying that Larry Summers campaign to become Fed chairman was in serious trouble, and here he’s gone and done us all the favor of getting the message.

Links 9/15/13

Do the Democrats Really Want to Bear the Blame for a Crash that Wall Street Will Cause?

By Joe Firestone, Ph.D., Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program. He taught political science as the graduate and undergraduate level and blogs regularly at Corrente, Firedoglake and Daily Kos as letsgetitdone. Cross posted from New Economic Perspectives

Lambert here: “Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully” (Samuel Johnson). One can only hope that Johnson’s bon mot goes for Democrats.

This post by Lynn Parramore makes the point that the next crash is coming and probably will be blamed on the Democrats. It’s a great point, but it needs to be pursued further.

Can Politics Make a Stone That’s Too Heavy to Lift?

By Dan Fejes. Cross posted from Pruning Shears

In 2006 Matthew Yglesias posted “The Green Lantern Theory of Geopolitics” at the now-defunct site TPM Café. He wrote how he enjoyed reading Green Lantern comic books and briefly explained how the power rings from the series worked, then added:

But a lot of people seem to think that American military might is like one of these power rings. They seem to think that, roughly speaking, we can accomplish absolutely anything in the world through the application of sufficient military force. The only thing limiting us is a lack of willpower.

Links 9/14/13

James Galbraith, Neil Barofsky, and John Coffee Discuss Lessons from Lehman Meltdown

I have to confess that given the length of this panel discussion presented by Better Markets, I’ve looked only at the start, which is quite promising. Given the caliber of the participants, I’m hoping to get to it over the weekend, since it will be a departure from the bromides the MSM seems to be serving up on this anniversary of the Lehman collapse. This talk is oriented towards a discerning audience and offer more insider detail.

The G20 St. Petersburg Summit: Bubbles, Casinos, and Inactivity

By Sameer Dossani, an advocacy coordinator at ActionAid International, a development NGO dedicated to ending poverty. Cross posted from Triple Crisis

While much of the media coverage around the G20 leaders summit has been about the failure of international diplomacy in Syria, the formal agenda was around one issue: growth. But focusing on growth is a bit like treating strep throat with asprin. You may alleviate some of the symptoms, but you’re not treating the source of the problem.

Links 9/13/13

Obama’s Exceptionally Weird Speech on Syria

By Lambert Strether of Corrente.

“Oh, this will be easy,” I said to myself. “This speech is short!” Boy, was I wrong. I’ve always felt that exegesis saves, but now I’m experiencing a crisis of faith. Can there be bullshit so deeply impacted that it’s proof against color coding? We’ll see. But first, here’s why I thought the speech was weird:

Why You Should Learn to Love the Brave New World of Low Liquidity

The Financial Times reported earlier this week (hat tip Scott) how banks are cutting the size of corporate bond trading desks and reducing the size of trading inventories, all as a result of big bad regulations. As a result, the banks would like us to know, investors might be hurt by a lack of liquidity! Horrors!