Comments on: Regulation and Financial Complexity http://www.arnoldkling.com/blog/regulation-and-financial-complexity/ taking the most charitable view of those who disagree Mon, 21 Dec 2020 16:18:52 +0000 hourly 1 https://wordpress.org/?v=4.0.32 By: Andrew' http://www.arnoldkling.com/blog/regulation-and-financial-complexity/#comment-463259 Wed, 13 Jan 2016 13:26:39 +0000 http://www.arnoldkling.com/blog/?p=6383#comment-463259 By the way, if we all owed someone else our entire revenue, in other words, everyone has 100% counterparty risk, wouldn’t (most) economists say there is no problem? As long as everyone can keep paying, what is the problem? The problem is when someone can’t pay. But how is the actual risk predictable? It is is based on predicting a catalyst and timing, which is basically not predictable over and above the market’s prediction. Isn’t it a fool’s errand based on pretty basic economic theory? The better approach would be allowing markets to develop whereby the “heroes” can buy or sell at a profit to the “villains'” losses. Which brings us to when are politicians ever going to be heroes in the sense that the heroes have to be contrarians?

]]> By: Andrew' http://www.arnoldkling.com/blog/regulation-and-financial-complexity/#comment-463250 Tue, 12 Jan 2016 17:32:07 +0000 http://www.arnoldkling.com/blog/?p=6383#comment-463250 “the inability of regulators to assess and quantify the counterparty credit risk”

I assume there is some evidence they actually tried and that there was some policy mechanism attached to some lever.

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