http://www.theatlantic.com/doc/200905/imf-advice/4
"Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail.Sound promising? Yeah baby yeah! It continues:Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs."
"Ideally, big banks should be sold in medium-size pieces, divided regionally or by type of business. Where this proves impractical—since we’ll want to sell the banks quickly—they could be sold whole, but with the requirement of being broken up within a short time. Banks that remain in private hands should also be subject to size limitations."Still hot to trot? That's simple Simon Johnson, former head green eye shade agent of the IMF.
I bet you still like his reasoning. Read on:
"This may seem like a crude and arbitrary step, but it is the best way to limit the power of individual institutions in a sector that is essential to the economy as a whole. Of course, some people will complain about the “efficiency costs” of a more fragmented banking system, and these costs are real. But so are the costs when a bank that is too big to fail—a financial weapon of mass self-destruction—explodes. Anything that is too big to fail is too big to exist."(Here's the goofball drop)"To ensure systematic bank breakup, and to prevent the eventual reemergence of dangerous behemoths, we also need to overhaul our antitrust legislation...."
"... Laws put in place more than 100 years ago to combat industrial monopolies were not designed to address the problem we now face. The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy."Simple question: so a thousand dominoes, all able to fall into each other in sequence, won't all drop just because they're independently owned? Horse apples.
The Wall Street credit system went into crisis, not because it was an unaccountable bunch of giant octopi, but because the system's basic operating units -- as big as they seem to the naked pleb eye -- are in fact too small, too private, and too self-dependent.
The truly sublating re-structuring -- which we won't see of course -- is one big national credit/payments grid, hooked directly into Uncle's dollar mine, and all strung deftly together with a wickedly flexible set of credit lines and tripwires, geared and regulated by interest and principal payments, replete with default and delinquency premiums, principal balance adjustments, etc., all based on an indexed state of the economy morph-mode algorithm designed to... blah blah blah. As our last Spartan, Mike Dawson might say, 'just a lot o' practically simple but politically impossible stuff.'
Listen up, all you red plebs, with yer oh so so kool small local and green is beautiful fools' macarena -- this isn't our great great great grand daddy Andy J's America we got convulsing out there on us. Today we got both the tools and the tech to climb right out of this national seizure, and into a public credit system with loan agents that don't need to be shot on sight by honest toilin' folks.
One grid, many contending nodes.
Agency issues? Dealt with through shrewd compensation packages.
Comments (17)
I think Johnson's point about breaking up the big banks is not that many small banks would be more efficient, but that they would not have the masssive political power the big banks now do.
Who first proposed the idea of repealing Glass Steagal? Probably not a regional banker in Des Moines. The only problem I can see with breaking up the big banks is where would the Treasury then find the expertise to run itself? (that's a joke, son!)
Posted by hce | April 1, 2009 5:04 PM
Posted on April 1, 2009 17:04
there must be a bug around. people are sneezing "credit is a utility" all over the place.
Posted by hapa | April 1, 2009 5:05 PM
Posted on April 1, 2009 17:05
i don't know, henwood thinks concentrating the banking system would be better:
http://doughenwood.wordpress.com/2009/02/28/the-virtues-of-concentration
Posted by dermokrat | April 1, 2009 5:28 PM
Posted on April 1, 2009 17:28
hce
its the systemic crisis threat that would not be removed by fragmentation
i ..god protect me ...gulp
might agree with henwood doug here
i'll check him out
hapa u hobbit u
the word utility implies nothing
useful to the discussion only a vague analogy
to other crucial society wide services
hell isn't the credit card system
already a utility ????
as i said
i'll check out dougwood hen...
Posted by op | April 1, 2009 8:13 PM
Posted on April 1, 2009 20:13
IMF indeed. NerObama is now saying the days of the US as "voracious consumer" are over. That's pretty big evidence that MJS is right -- a social-spending clamp-down is coming, after the dust settles in the bank-dole.
Sansculottes, anybody?
Posted by Michael Dawson | April 1, 2009 8:27 PM
Posted on April 1, 2009 20:27
" populist vision is one where everyone owns a small business and credit is practically free"
henwood
well credit can be practically free
if by that u mean the real rate of interest approaching zero
free but rationed of course
and you gotta pay it back on time
this petty form vision
of hyper wide spread
proprietary enterprise
is consistent with a unified credit payment grid
and i don't mean human capital sold to corporations to be exploited
or even for full value
but stand alone outfits
in andy's day this was inconceivable
except in crack pot visions
now its within reach...easily
hen sees private consolidation
i see nationalization of the depository system
very very very different
i'm no yellow dog soc-dem
commanding heights don't mean
a building in washington
full of lawyers and accountants
policing a regulated system of private credit
no matter how concentrated
that is precisely what simple simon
means above by
"Oversize institutions disproportionately influence public policy"
indeed introduce a class of stock and or bond holders and we're off to the races
now of course loans to the people's reps
get to be a temptation
here's one of many places
where lots of mutual rival nodes enter
the model
but hey
the cook shops of the new eden
hardly need a menu or recipes
made out now
there will be time enough come the day...
Posted by op | April 1, 2009 8:29 PM
Posted on April 1, 2009 20:29
garsh! i thought they meant a cooperative utility. if there are really that many more uncooperative people in the country than i was counting, i have to redo my report.
Posted by hapa | April 1, 2009 9:37 PM
Posted on April 1, 2009 21:37
garsh! i thought they meant a cooperative utility. if there are really that many more uncooperative people in the country than i was counting, i'll be up all night fixing my report.
Posted by hapa | April 1, 2009 9:40 PM
Posted on April 1, 2009 21:40
drat.
Posted by hapa | April 1, 2009 9:41 PM
Posted on April 1, 2009 21:41
Owen, I'm too tired to call you all the names you so richly deserve, like "rabidly centralist, puppy-boiling Jacobin orc". The utility model is perfectly adaptable to a non-profit or deferred capital replacement social ownership scheme, of just the kind you've outlined here. It makes sense to regionalize it and devolve most decisions to the local level. Give everyone who has skin in the game, by mere fact of existence, some say in how the capitalization of their projects is to play out. There may well be some hobbitry involved, but it needn't turn into a proliferation of nasty little Babbitts.
Posted by Al Schumann | April 1, 2009 10:12 PM
Posted on April 1, 2009 22:12
al
".. adaptable to a non-profit or deferred capital replacement social ownership scheme, of just the kind you've outlined here. It makes sense to regionalize it and devolve most decisions to the local level. "
i'm
totalitarianly in agreement
in fact it won't work any other way
the multi node autonomy part is frantically local
of course still networked
but retaining total local initiative
the comprehensive unitarian structure operates more like a fluid but finite
holy ghost power
then a team of ugly uncle jehovah's agents
but this is needlessly crucial
the key is wall to wall interdependence
the end to hedge row bankling
no loan is my loan no loan is your loan
my default is your default your default is my default
solvency thru faith not good payments
martin luther enters here
and he was into the ultimo in loco local :
an individual soul's faith in the system
not her /his credit history
all the rest
is dynamic lower archy and shrewd
incentive algorithms
"Give everyone who has skin in the game, by mere fact of existence, some say in how the capitalization of their projects is to play out "
yes they all will feel the pull of
all other projects
as the limits on their project
transparent socialization
of the boundary conditions
not some barky anal fudge fucker
saying nyet
in a opaque process
that ends with
" sorry sir but after all
u can only blame yourself "
Posted by op | April 2, 2009 7:37 AM
Posted on April 2, 2009 07:37
hapa
save that report
rub out a few words and presto
your teacher ms ratchet will melt
or molt or malt into
patti smith
t'is a universal co-operant system
a short putt from co operative
but a giant monster drive down the fairway
toward full socialization of the economy
Posted by op | April 2, 2009 7:48 AM
Posted on April 2, 2009 07:48
"the days of the US as "voracious consumer" are over. That's pretty big evidence that MJS is right -- a social-spending clamp-down is coming" (MD)
"Social spending" and "voracious" consumption aren't the same thing, MD. One signifies unemployment, social security, medicare, etc, the other signifies buying a new car every three years.
OP: The Web of Debt, the book I mentioned recently, explains how a public banking/credit system would work, as opposed to the private one we transplanted from the Brits.
Who is your authority on networked local economies, or whatever it is you're talking about?
Posted by hce | April 2, 2009 12:59 PM
Posted on April 2, 2009 12:59
"the days of the US as "voracious consumer" are over. That's pretty big evidence that MJS is right -- a social-spending clamp-down is coming" (MD)
"Social spending" and "voracious" consumption aren't the same thing, MD. One signifies unemployment, social security, medicare, etc, the other signifies buying a new car every three years.
OP: The Web of Debt, the book I mentioned recently, explains how a public banking/credit system would work, as opposed to the private one we transplanted from the Brits.
Who is your authority on networked local economies, or whatever it is you're talking about?
Posted by hce | April 2, 2009 1:00 PM
Posted on April 2, 2009 13:00
It's not me who equates "voracious consumer" and social spending, hce. It's the overclass. This is code-talk signifying that NerObie isn't going to pull a New New Deal out of his hat.
In overclass talk, "consumer" means the non-rich, the commoners, the proles.
That, of course, does great violence to reality. But them's the codes...
Posted by Michael Dawson | April 2, 2009 1:30 PM
Posted on April 2, 2009 13:30
P.S. to hce: NerObama actually used the phrase "a voracious consumer market," which strengthens the point that boosting aggregate demand (aka raising commoners' incomes) is not in the cards.
Posted by Michael Dawson | April 2, 2009 1:52 PM
Posted on April 2, 2009 13:52
" it (web of debt) explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln."
yikes !!!!!
hce aka sen
"step away from that book..."
Posted by op | April 2, 2009 11:35 PM
Posted on April 2, 2009 23:35