Author Archives: Yves Smith

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.

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

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

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!

RJ Eskow: 11 Questions to Ask Libertarians to See if They Are Hypocrites

Yves here. It is all too easy to goad libertarians, since their ideas are internally conflicted and they get prickly when you point out the flaws in their dogma.

Links 9/12/13

Wolf Richter: Housing Bubble In Full Bloom, Zany Price Increases, And Now A Sudden Slowdown

Cities have seen dizzying home-price increases that are giddily reported and infused with pandemic housing hype and trillions from the Fed into a self-propagating force. But what happens when it hit the immovable object of higher mortgage rates?