John Kay on Financial Reform

He writes,

It is hard enough to find people capable of running financial conglomerates – the fading reputation of Jamie Dimon, JPMorgan Chase chief executive, confirms my suspicion that managing these businesses is beyond the capacity of anyone. The search for a cadre of people employed on public-sector salaries to second guess executive decisions is a dream that could not survive even the briefest acquaintance with those who actually perform day-to-day supervisory tasks in regulatory agencies. They tick boxes because that is what they can do, and regulatory structures that are likely to be successful are structures that can be implemented by box tickers.

Kay’s views align exactly with mine. For close to five years now, I have been saying that we should not be aiming for making the financial system that is harder to break. We should aim for a system that is easier to fix.

Thanks to Alberto Mingardi for the pointer.

4 thoughts on “John Kay on Financial Reform

  1. but this is true of any regulations. You ever manufacture a pharmacuetical? Do you know how many different processes are employed? How about all the different systems employed to run these processes? How about…

    Check boxes, look for inconsistencies (which is very hard when you don’t understand the process). That is regulation.

  2. I think there is a fundamental misunderstanding of what “robustness”, as in a robust financial system, means.

    Robust means that it can survive the inevitable shocks.

    It does not mean eliminating shocks.

  3. Liberalism was the age of investment choice based upon schemes of credit liqudity and carry trade investing; both of its spigots of investment liquidity traded lower on Monday, October 28, 2013, and competitive currency devaluation commenced with currency traders calling currencies lower, and the US Dollar, $USD, UUP, higher.

    Financial marketplace trading on Monday, October 28, 2013, continued a trend lower from October 23, 2013, and communicates that the financial markets has turned from bull to bear.

    With the ECB announcing a plan to supervise 130 European Banks, and the UK Central Bank providing the new monetary policy tool of the Revised Sterling Monetary Framework, and the US Federal Reserve providing two new monetary policy tools, that is Fixed Rate Full Allotment Reverse Repo Facility, and the Liquidity Coverage Ratio, the monetary policies of the world central banks have changed from expanding the money supply, to integrating banks into government, introducing the antifragile financial system.

    Financial market place trading, world central banks’ monetary policies an monetary tools, and enduring enforcement of austerity measures by the Troika in exchange for seigniorage aid, have pivoted the world from the economic and political paradigm of liberalism into authoritarianism. The world central bankers have effected a global economic and political coup d’etat, pivoting the world from democracy into statism, as on October 23, 2013, Jesus Christ, fully opened the First of Seven Seals of The Scroll, Revelation 6:1, containing the details of the culmination of history, Revelation 1:1, which releases the First of the Four Horsemen of the Apocalypse, the Rider on the White Horse, who has a bow but no arrows, signifying his role in effecting a global coup d’etat, transferring sovereignty from nation states to nannycrats and regional bodies, as they come to rule in regional governance, in each of the world’s ten regional areas.

    Authoritarianism is the age of diktat based upon schemes of debt servitude and totalitarian collectivism. Investors can no longer profit from investing long the financial markets; wealth can only be preserved by investing in and taking possession of gold and silver bullion.

    The world passed through peak democracy on October 23, 2013, as World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, turned lower from their PBOC Monetary Stimulus, and US Fed No Taper, and ECB Bank Supervision Rally highs.

    Under liberalism, central bankers provided democracies, that is nation states, with fiscal, and investment seigniorage, that is moneyness, based upon investment opportunities in each country, and those investment opportunities were enhanced by strict austerity coming from the Troika, two cases in point being Ireland and Greece.

    Liberalisms world central bank credit interventionist and money creation monetary policies and monetary tools, gave investors stunning investment gains from June 24, 2013, to October 23, 2013, with the PBOC Monetary Stimulus, and US Fed No Taper Stimulus, and ECB Bank Supervision Rally Stimulus, gave awesome seigniorage to Eurozone Stocks, EZU, Eurozone Financials, EUFN, Ireland, EIRL, and its bank, IRE, and Spain, EWP, and its bank, SAN, and Greece, GREK, and its bank, NBG.

    Yet on Monday October 29, 2013, the seigniorage, that is the moneyness of liberalism failed, and the moneyness of authoritarianism, specifically the seigniorage of diktat terminated democracy, and commenced regional governance, for the purpose of regional security, regional stability, and regional security, all with the establishment of EU bank supervision, and its banking nannycrat, Ignazio Angeloni, Danny Hakim of the NYT writes The Man Who’ll Do Triage on Europe’s Banks. Ignazio Angeloni, is a man with a mission: “You have to supervise what banks do,” Mr. Angeloni of the ECB said. He heads the European Central Bank’s financial stability division, giving him a lead role in a task about to begin: examining the books of the 130 or so largest banks in the 17 members of the European Union who use the euro. It will be financial triage aimed at determining which banks are sound and which are not; good luck with that.

    Regionalism is replacing capitalism, European Socialism, and Greek Socialism as a way of life. And regional integration is replacing global growth and trade, and corporate profitability as the dynamo of economics.

    The world attained peak democracy on October 22, 2013, when Global Financial Institutions, IXG, traded to an all time new high, which came through the world central banks monetary policies of investment choice, and provision of credit and carry trade investment, through the speculative leveraged investment community, consisting of the Too Big To Fail Banks, RWW, Investment Bankers, KCE, Stock Brokers, IAI, European Financials, EUFN, Emerging Market Financials, EMFN, Chinese Financials, CHIX, Regional Banks, KRE, and Asset Managers, such as Blackrock, BLK, as well as real estate investor, BX, and which produced a terrific moral hazard based peak prosperity.

    Democracy expanded to its fullest amount; democracy attained its fullest potential, on October 22, 2013; this coming on the swell of world central bank assets, value of credit service companies, such as NNI, AXP, WRLD, IX, NICK, WU, AGM, and others seen in this Finviz Screener, liberal credit, such as JNK, UJB, BKLN, FAGIX, and currency carry trades, such as, EURJPY, and AUDJPY.

    Under democracy, bankers, corporations, government, entrepreneurs, and citizens of democracies, acting as investors were the legislators of economic value and the legislators of economic life.

    Evidence of peak democracy comes from the investment value of small cap stocks such as the Small Cap Pure Value, RZV, and Small Cap Pure Growth, RZG, as well as the Russell 2000, IWM, the Russell 2000 Pure Value, IWN, and the Russell 2000, IWO, reaching new all time highs, as investors have given full credit, that is full trust, to these fiat assets.

    Peak democracy has produce peak fiat wealth, all on the sovereignty of the world central banks, and the seigniorage of the speculative leveraged investment community.

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