Comments on: History repeats itself, financial-regulation edition A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: traducere daneza Mon, 29 Sep 2014 14:05:30 +0000 Coach Lippi dialogue bloodshed melon handsome: he is a coach dangerous end, thousands of miles away in Morocco China football will witness a historic “pilgrimage” trip

By: KarloPetov Tue, 16 Jul 2013 03:50:37 +0000 This argument is INSANE. What happened to sovereignty? Why do all countries have to do the same thing? What if the ‘international standards’ are just wrong for your country? Isn’t everybody copying each other also known in the ant kingdom as the march of death1?

Country #1: funds large military expenditure, fails on delivering healthcare and education targets, taxes it’s people @ 40% (UK, USA, Canada etc)

Country #2: funds no military, focuses on delivering key social services, taxes it’s people @ 12%.

The political class of Country #1, poo-poo Country #2 for not following ‘international standards’.

Try to think for yourself instead of copying the international mediocrity.

By: JohnParsons Wed, 10 Jul 2013 16:54:26 +0000 One reason that “America’s banks in particular seem to be extremely good at holding roughly zero capital against their mind-bogglingly enormous derivatives books” is that many people buy in to the erroneous notion that risk is a function of net exposure as opposed to gross exposure. But large gross exposures set up the possibility of a “run”, as happened at Bear and at Lehman.  /hiding-risk-by-netting-exposures/

By: realist50 Wed, 10 Jul 2013 15:54:57 +0000 I would recommend thinking more about public choice theory, and in particular William Niskanen’s budget-maximizing model of government agencies*, before making a blanket statement such as “the fact is that regulation is one of those things that doesn’t have a natural political constituency.”

I concur that there are no guarantees that this regulation will take an optimal or even useful form – for example, the combination of career regulators, industry lobbying, and the job movement of former regulators to the regulated industry creates incentives for regulation that entrenches incumbents and is overly complex rather than focusing on enhancing public welfare. (Regarding complexity, regulators are boosting the employment opportunities for themselves in both government and the private sector.)

More broadly, and at a political rather than bureaucratic level, a politician making promises to be tough on the banks is a vote getter, especially since 2008. It’s actually one of those relatively rare issues – immigration is another – where support and opposition cuts across party lines. The Brown-Vitter bill on bank capital is an example.

* Distilled to a 1 sentence summary, the natural incentive for the civil servants running a government agency is to maximize the budget and regulatory authority of that agency.