Another banking crisis would not be good

September 4, 2009

Curious Capitalist Justin Fox notices that time is running out on financial reform:

Earlier this year, when this regulatory crackdown was still in the hypothetical future, it was easy to sound tough about it. But now the big banks are making money again. The global economy seems to be recovering. The time to start cracking down is coming soon. Because if big financial regulatory reform doesn’t happen in the next year or so, it may never happen.

Me: I do know this: We can’t afford another banking crisis anytime soon. American debt-to GDP is already going from 33 percent to at least 80 percent by 2019. Another one and we just might have to follow Andrew Mellon’s advice and liquidate, liquidate, liquidate.

4 comments

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The mark-to-myth fiasco is teetering. The ugly condition of CRE is getting harder to hide from balance sheet view.

I’m afraid another banking crisis can’t be avoided much longer.

The truth surrounding valuations is becoming more and more unavoidable.

Posted by rayman in CA | Report as abusive

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Thought for the day: Don’t spend money you don’t have. There will certainly be another so-called banking crisis and the government will bail them out and award large bonuses to the directors. This is just another step in the socialism path that we are being led down. It will certainly play out in textbook style. Wait and see.

Posted by Frank | Report as abusive

Money supply is 4x too small. Of course there is going to be another financial crisis. Expand the supply, tax the windfalls pay off debt, That is a soft reset my friend. Banks making money (they don’t make anything, they are supposed to manage money for a fee) is a joke, BIG ONE. Investment banking and agents of the leveraged buy out should find a corner to sell pencils, their lack of vision should cause them to gouge out their own eyes.
Anyways: Inject 4x the money supply at the bottom strata of this society and watch what happens. Slavery in America at the hands of whoever would end and on the other end there would be a scramble to provide needed goods and services. ( Not much I’m buying though). Tah…

Posted by DanO | Report as abusive

Dear James,
After reading your short article on banks in America,i started smiling.
I have not seen anywhere,except in developed countries like America,Germany,England and some western countries banks are in serious troubles,and their crisis are multiplying day by day.
Because of no proper banking regulations and loopholes of functioning and maintaining their day today operations.
Who are all suffering?Only deposit holders,saving bank pass holders and retired people.
This is not a good sign at all.
Hereafter,there should be very strict regulations,transparent banking transactions,and a very good audit mechanism for creating,consolidating confidences from public and for correct,balanced growth for smooth transition to real good results.

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