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overtheedge
Member since May 2012
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How « Too Big to Fail » Thinking Trumps Competition and Increases Risk of Banking Crisis - Philippe Herlin - GoldBroker

"The IMF states that governments have a long road ahead to « protect tax payers (and I would add the savers), insure equal opportunities and promote financial stability. » Hear, hear!"

Protecting taxpayers from banking failures is easy. NO BAIL-OUTS.

Protect savers? The only proven method to protect savers is by enforcing bank failures.
The risk-reward curve must be allowed to function.
Savers must learn to examine bank viability or pay the price.
Trust and respect aren't entitlements. They MUST be earned.

Until the Federal Reserve Act and creation of the FDIC, the system eliminated the banks that were gamblers, miscreants and fools.
In the USA for instance, government took the Constitution's commerce clause to the extreme.
Consequently the so-called free-market became contained, controlled and manipulated to the point of "Don't bet against the Fed."
Now the Fed and DoJ decide who gets their hands slapped. The IMF is just the Fed on steroids.

Insure equal opportunity? Let's just nationalize everything, not!
There can be no equal opportunity when there are different asset values, different risk profiles and perhaps most important, extreme variability in management capabilities.

Promote financial stability? This can only happen by elimination of fiat money, outlawing fractional reserve banking and returning to the discounting of limited duration notes. As long as top down money management exists, there can be no stability.

The gnomes hired math geeks with computer models and as the profits rolled in, the gnomes developed a religion based upon those models.
If the models worked so well, why are we in this fix and WHY am I prompted to pen this reply?

Granted, Mr Herlin doesn't represent the IMF. However he went far too easy on them.
The IMF doesn't seem to realize that managed economies have always failed and usually with disastrous results.
Or perhaps they do and these Herculean efforts are just a delaying tactic to gain a little more time to prepare to "meet thy end"?

Commented 3658 days ago

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Beginning of the headline :We are aware of the problems of « Too Big to Fail » banks : They are so big that, if they were to fail, it would cause such economic havoc that they can rest assured to be bailed out by the State. And they’re taking advantage of this situation by taking on even more risk! This perverse effect, this « moral hazard », makes for a much less stable financial system, more exposed to a crisis. In the third chapter of its last « Report on Financial Stability » of April 2014, the IMF writes about this ... Read More

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