Comments on: The beginning of the end of meaningful regulatory reform A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: Bull Dust Fri, 25 Sep 2009 10:25:44 +0000 Oh but we are that smart, Don. You see, regulation only ever serves to enhance the position (or appear to oppose) those who would benefit the most from such a ‘crisis’, or create an uneven playing field thereby rigging the game. When the gatekeepers are the thieves, regulation really loses its meaning.

By: Don the libertarian Democrat Wed, 23 Sep 2009 19:08:44 +0000 From DealBook:

“Mr. Geithner said those institutions whose problems could shake the financial system will face far greater regulatory scrutiny and higher capital standards. But under questioning from Representative Spencer Bachus of Alabama, the ranking Republican on the committee, he refused to rule out the possibility of future bailouts of big companies.

“You can’t have a system, how shall I say it, where you abolish the fire station, or lock the doors to the fire station,” Mr. Geithner said. “That’s not a system that works.”

This is the truth. The only difference from Bagehot’s point about the realities of having a LOLR is that, today, the LOLR will lend against crap assets. The only real solution is Narrow/Limited Banking plus a tax on size or size limit. It won’t be perfect, but it’s better than what we have now.

This reminds me of the concept of The New Normal, which means govt interjected into the economy, supposedly. As opposed to what? We had a system of deregulation guaranteed by the assets of the American people. That’s what we still have and will have. Given that the banking regulations are already being eased, can anyone imagine them getting tougher when the economy improves? If that’s the system, it would be far better to announce that we guarantee everything up front, since the bankers already believe it and act upon it, as do investors. What’s the point of hiding the truth?

The New Normal= Take it easy for a while until everybody forgets what happened. Play along a bit. It will be worth it in the end. Most of all, say the right things in public.

Now, I’m certain that these people don’t want a repeat of what occurred. But the problem is that they cannot bring themselves to accept the restrictions that we need. It’s the same overconfidence. We can’t seem to accept that we’re not that smart.