Now raising intellectual capital
from Rolfe Winkler:
Paulson says Russia urged China to dump Fannie/Freddie holdings (McKee/Nicholson, Bloomberg)
Avatar breaks $2 billion worldwide box office mark (Box Office Mojo) Very impressive of course, though on an inflation-adjusted basis, Avatar ranks just 25th all time. Nothing will ever beat Gone with the Wind.
Volcker Op-Ed: How to reform the financial system (NYT) Unfortunately not a lot of additional detail over his proposed reform plan. But for those not already familiar with it, this does offer a helpful articulation of Volcker's reform philosophy. Yves is happy Volcker has entered the fray, but believes he needs to go beyond his current thinking.
Frank says banks "recognize reality" by throwing support behind wind-down fund (Howell, Reuters) Am I alone in my fear that a wind-down fund will make matters worse? The idea that new "resolution authority" must be accompanied by a pool of funds to bail out systemic failures compounds moral hazard greatly. Even assuming that banks will be charged high enough insurance premiums to give the fund sufficient financial heft -- how well has that worked with the Deposit Insurance Fund? -- the very existence of this fund will provide an implicit guarantee to the creditors of the firms' backed by it. The DIF already creates major moral hazard by removing all depositor incentives to worry about the health of their banks. Now an even larger slice of creditors would be insulated from risk.