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Monday, February 2. 2015

Let the banks take the hit?

Are banks too big to fail? Or should they be allowed to blow up when they make poor investments?


Case in point: Greece Just Blew Up The Empire's Death Star Of Debt:



 There's nothing complicated about it: Capitalism requires the discipline of losses being taken by those responsible, the firing of incompetents and the destruction of imprudent lenders.



and



Let's set aside the propaganda for a moment and get real: anyone with the slightest knowledge of Greek finances and the power structure of the Greek economy/society knew it was insanely risky to loan Greece billions of euros. 



Interestingly, some financial institutions do not want to be listed as "too big to fail." 

Posted by The News Junkie in Hot News & Misc. Short Subjects at 16:22 | Comments (5) | Trackbacks (0)

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I'm all for letting them blow up. Things will get as rough for a while, governments will fall, broker fees shrink, etc but the merry go around has to stop.
#1 walt moffett on 2015-02-02 16:57 (Reply)
Banks were basically pressured by the EU into loaning money. No free market there.

But where now is Greece going to get investors? Both finance and industry would be crazy to set foot in that country.

The fate of Greece is like the fate of many socialist enconomies in Europe, when money gets tight either the government goes broke, or it prints more worthless money, or both.

When a government finances is operations by borrowing indefinitely on the future, something will give. The Greek economy is about to plummet like a stone.
#2 jay on 2015-02-02 21:26 (Reply)
You are right about that, jay. The banks had little choice in funding Greece. But, now, if Greece blows up, then what the Greeks thought was austerity will turn into living within your means and that will be true austerity. The Greeks will not like it. However, it is ironic that the government that promised to eliminate austerity will be the one to impose it.
#2.1 Rick Caird on 2015-02-07 16:38 (Reply)
Any policy which provides government guarantees to any economic activity is a guarantee that activity will fail. Period. And, in case I wasn't clear enough, that includes banks and all other financial institutions. While there may be rough times for a short period, the economy will recover and the damage will be - mostly - limited to those who were the cause of failure. If they are guaranteed, the damage will be spread around until the entire system is at risk. Don't believe me? Have you been paying attention to the housing market since 2008? Did you notice how it got that way? What do you think is happening again?? Geeze.
#3 Ike on 2015-02-03 09:30 (Reply)
Bankers and business executives would not take excessive risks if they knew they would be financially ruined and go to jail for making mistakes. Yes, they would be less likely to make huge gains, but they should be personally responsible for their decisions. Just like the rest of us.

Today I heard a report that S&P management was warned about the coming housing collapse, but would not change their rating because they were being paid by the companies they rated.
#4 Dave on 2015-02-03 19:18 (Reply)

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