Some Uncharitable Thoughts

Regarding Mark Thoma’s links from the other day.

1. Will Americans ever vote for a far-reaching wealth tax?–Roger Farmer.

No, but we will have one, anyway.

2. Enhance Stability by Improving Culture–William Dudley.

Look who’s talking.

3. Is mortgage credit too tight?–Calculated Risk.

Not by the standards currently set by politicians. If you tell banks you have zero tolerance policy for making type I errors (making loans that eventually default), you have to expect many type II errors (passing up good loans). Of course, 10 years ago, the political pressure was the opposite.

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4 Responses to Some Uncharitable Thoughts

  1. Floccina says:

    Shouldn’t the FDIC act like an insurer and:
    1. Charge more to riskier firms.
    2. Threaten to drop firms that take on too much risk.
    3. Judge risk in any way that they see fit?

    Perhaps ideally the FDIC would be un-bundled and the head of the FDIC should be elected separately. IMHO our government is not well structured for the amount of unrelated task that it does. If I want a change in at the FDIC how am I to vote?

  2. doombuggy says:

    The pattern of bad behavior did not end with the financial crisis, but continued despite the considerable public sector intervention that was necessary to stabilize the financial system. As a consequence, the financial industry has largely lost the public trust.

    Maybe we should just nationalize the thing.

    Is finance a mere utility function? Do we get added value by paying the bonuses and fees?

    • Jody says:

      Per PSST, there’s also a search function component. If you don’t search, the market stagnates. In theory, the bonuses and such are going to those doing the searching.

      • doombuggy says:

        The invisible hand needs to be paid?

        Maybe so. But it seems to me there should be a less costly way to get the same results.

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