Tuesday, January 15, 2008

Tax the bank-baskets on the number of eggs they carry!

To tweak and refine the current bank regulatory systems, for instance by further professionalizing the credit rating agencies, in order to get us to foolishly trust them even more, will just increase the systemic risks of a global failure.

The best and safest way is to follow the prudent tradition of not putting all your eggs in the same basket and to that effect create a progressive tax on the size of the banks. The larger the bank, the more it will hurt if it fails, so the more it should have to pay in insurance premiums.

Marx prophesied “a progressive diminution in the number of the capitalist magnates” and the best way I know of fighting Marxism is to stop this prophecy from becoming a reality.

Saturday, January 12, 2008

Stop the bank regulators!

It behooves us all to see what our bank regulators are up to, now when they have been caught with their pants down.

The more sophisticated our financial system gets the less we will understand it and the more we will have to place ourselves in the hands of experts; and thereby run the risk that our supervisor’s oversight degenerates because of the incestuous forces at work.

I do not purport to have the right answer but having seen how peddlers of supposedly prime potions poisoned the world’s financial system while bank supervisors were congratulating themselves on a job well done I have a feeling we should not let them dig us deeper in the hole we’re in, just because they want to save face.

We must require than non-bankers and non-supervisors are in majority in the bank regulating bodies and that our representatives are selected among persons humble enough to publicly accept that they don’t understand it when they don’t understand it.

Thursday, January 3, 2008

If knowledge suffices then wisdom is worthless

If knowledge suffices then wisdom is worthless and sure enough our bank regulators placed more value on knowledge than on wisdom; which is the only way how you can explain such foolish behavior as empowering the credit rating agencies with so much power over the financial flows of the world.

See where this has gotten us. All the very sub-prime awarded mortgages to borrowers that classified as subprime would have not been able to go anywhere had they not been blessed as prime collaterals for other securities.

One reason that stops the world from realizing the foolishness of it all is that the credit rating agencies are private, and we have all been Pavloved into establishing a connection between private and free efficient markets. The truth though is that the private credit rating professionals are only outsourced bureaucrats working for some pompous Ministry of Financial Risk Elimination.