NationStates Jolt Archive

So we've been watching this unfold for a while now. We've been watching giant companies join other giant companies and swallow up all the mom and pop stores around the country.

They did so with the promise of lower prices, better services, easier access, etc. And we ate it up. We were happy to support these industry giants until they drove all the competition away and we were stuck choosing between crappy banks that screw you at every turn because they have no competition, giant automakers they force out or buy up any competitors, superstores providing crappy goods and terrible service, bad service, bad food, ridiculous fees, etc.

And, now, for all our indifference to the violations of antitrust laws and their very intent, now these very companies are claiming to be "too big to fail".

My thought is... if you're too big to fail, you're too big, period. There's a reason why monopolies and oligopolies are bad for industry. These idiots begged us to allow them to form and are now telling us we're forced to save them because they formed them. What say you?

Does size really matter? :p

Is the claim valid or just to deflect scrutiny of an effort to protect the big investors?

Why not let AIG fail. Why not let the large investors loose their money and simply go through the rubble and pick out the good assets?

Let them fail. The current system is obviously not working, and it is futile to expect that they change once they have been bailed out from the pocket of the taxpayer.

The big box thing can't last but hopefully it will all die off with a whimper instead of some sort of cataclysmic catasomething.

Large things can be good. Small things can be good. Large things can be bad. Good things can be bad. Anything can be good or bad, size alone doesn't define that.

We as consumers have made the decision to favour large chains over individually owned small businesses. And in some/many cases, we made the wrong choice. Let's support the good businesses that are left, regardless of size, and hope the market will get out of this thing caused mostly by the housing bubble.

And yes, there is no such thing as too big to fail. On the other hand, I support keeping people employed over giving them welfare payments-at least they're creating something of value, which slows down inflation. I do not however, support the bail out in the form it was done.

The goverment has antitrust laws. They have an obligation to enforce them, to encourage competition. It's a necessary part of the economic system we have. They haven't. Republicans, specifically, want us to allow capitalism to work and simultaneously look the other way while these giant companies have been raping the system.

Is it coincidence that all of the airlines basically offer the same services at the same prices? That gas prices vary by a couple of pennies at competing brands? That every single bank charges you incredible fees for overdrafts, fees that would be an illegal percentage if you were talking about temporary loans?

We've all know of the collusion between the major companies. It's been rather obvious. Why is it obvious? Because no one's going to do anything about. Now, they're fully admitting they're too big. it

Republicans, specifically, want us to all capitalism to work and simultaneously look the other way while these giant companies have been raping the system.
Because anyone's going to do anything about. I don't think either of those sentences mean what you think they mean.
>.>
<.<

...crappy banks that screw you at every turn because they have no competition...
Huh? (http://forums.jolt.co.uk/showthread.php?t=584932)

Is it coincidence that all of the airlines basically offer the same services at the same prices?
They don't. See no-frills airlines.

That gas prices vary by a couple of pennies at competing brands?
No. 90% of gas price is oil.

That every single bank charges you incredible fees for overdrafts, fees that would be an illegal percentage if you were talking about temporary loans?
No. Banks absolutely hate being shortchanged. They want you to use appropriate services or increase your account balance. These overdraft fees are punitive.

I blame delicious cakes that are so much better than that shit you buy at corner shops

er...there is probably a metaphor or something in there

Large things can be good. Small things can be good. Large things can be bad. Good things can be bad. Anything can be good or bad, size alone doesn't define that.

please tell me your a woman :$

The goverment has antitrust laws. They have an obligation to enforce them, to encourage competition. It's a necessary part of the economic system we have. They haven't. Republicans, specifically, want us to all capitalism to work and simultaneously look the other way while these giant companies have been raping the system.

its up to the consumer to blow the whistle

Is it coincidence that all of the airlines basically offer the same services at the same prices?

I so totally made a thread on that (you should of done music CD's its a much better example) really it comes down to how much people are willing to pay and its got nothing to do with how big the industry is

*shakes fist at flower stores jacking up prices on valentines*

They don't. See no-frills airlines.

All of them are no-frills these days.

No. 90% of gas price is oil.

Bullshit. You can't tell me that every company has no choice but to use the same means of transportation, the same means of refining, the exact same means of everything so they have no choice but to charge the exact same price as the guy across the street. And, of course, just happen to raise the prices by the exact same amount as that guy when it's Memorial Day weekend, or when two planes hit two buildings and cause a gas panic.

Meanwhile, oil companies are those names you see on the gas stations, Shell, Mobile, etc. That's who I'm talking about.

No. Banks aAllbsolutely hate being shortchanged. They want you to use appropriate services or increase your account balance. These overdraft fees are punitive.

You realize that doesn't actually address the statement, right? You just spoke of banks as if they have a single mind while I was accusing them of having a single mind.

its up to the consumer to blow the whistle

And consumers do. It is not only for the consumer to blow the whistle, however. Are you telling me anti-trust legislation requires someone to complain?

I so totally made a thread on that (you should of done music CD's its a much better example) really it comes down to how much people are willing to pay and its got nothing to do with how big the industry is

*shakes fist at flower stores jacking up prices on valentines*

How much consumers are willing to pay is greatly affected by competition. Why do you think there are anti-trust laws in the first place?

Bullshit. You can't tell me that every company has no choice but to use the same means of transportation, the same means of refining, the exact same means of everything so they have no choice but to charge the exact same price as the guy across the street. And, of course, just happen to raise the prices by the exact same amount as that guy when it's Memorial Day weekend, or when two planes hit two buildings and cause a gas panic.

Meanwhile, oil companies are those names you see on the gas stations, Shell, Mobile, etc. That's who I'm talking about.

Interestingly enough, though a little off topic, at the point when the gas prices were coming down and dropping below $2.00 here, there was a BP station at a major intersection in my area that dropped its prices to near where the average price in the area was. However immediately across the street (you could throw a stone from one parking lot to the other) was an Exxon station whose price never once dropped below $1.99 (and still hasn't, even though the prices are lower right across the street).
I could not, and still can't, seem to figure out why. Especially since it still got quite a few customers.

Huh? (http://forums.jolt.co.uk/showthread.php?t=584932)

Come to my town. I challenge you to find five banks.

Here's the thing. They set you up by creating really odd rules that practically require me to use a national bank, too. I'll give you an example. I've frequently been required BY LAW to appear in person to make certain changes to my account. That means, I don't get to use a bank I can't visit while I'm at a customer site. The reason behind the law, according to the banks, is to prevent terrorism. That's right, to prevent terrorism. (I did a thread on this when I found out.)

And how do they prevent terrorism. They require me to show them a bill that shows my address. And how do I get a bill to show my address. I go into Verizon, telll them what address I wish my bank to see, and then bring that. It doesn't prevent anything. It only inconveniences an honest person who is trying to adjust their services.

It's probably just coincidence that it makes using a local bank nearly impossible for me and anyone like me. The government never makes laws that intentionally benefit the giants. It would be silly to suggest otherwise.

All of them are no-frills these days.
Not at all. AA, Virgin, Delta.


Bullshit.
Fact. The majority of gas price is oil.


You can't tell me that every company has no choice but to use the same means of transportation, the same means of refining, the exact same means of everything so they have no choice but to charge the exact same price as the guy across the street.
http://www.virginiagasprices.com/index.aspx?fuel=C
http://www.virginiagasprices.com/index.aspx?fuel=D
Gasoline $1.82 to $2.88; diesel $1.79 to $2.99, within the same state.

That's far from "exact same price". For diesel, it's almost a 2-fold difference.


You realize that doesn't actually address the statement, right? You just spoke of banks as if they have a single mind while I was accusing them of having a single mind.
Yeah, well. Create your own that will have free overdraft. Except you won't. Industries tend to have similarities in charging style.

Fact. The majority of gas price is oil.



I thought the majority was tax. At least here in Germany

I thought the majority was tax. At least here in Germany
Not in US, where tax on gas is virtually or entirely nonexistent. Gas, at low-price pumps, costs only a bit above oil. Especially when oil goes up. Today 1.58 a gallon.

The goverment has antitrust laws. They have an obligation to enforce them, to encourage competition. It's a necessary part of the economic system we have. They haven't. Republicans, specifically, want us to allow capitalism to work and simultaneously look the other way while these giant companies have been raping the system.


I didn't know I wanted to allow capitalism to work while giant companies rape the system, thanks for pointing it out to me.

I didn't know I wanted to allow capitalism to work while giant companies rape the system, thanks for pointing it out to me.

Actually, when I talk about Republicans, I talk about the leadership. Frankly, joe schmo republican is irrelevant. Your leadership has been preaching about our government supporting capitalism while giving every company that asks permission to absorb all their competition.

Not in US, where tax on gas is virtually or entirely nonexistent. Gas, at low-price pumps, costs only a bit above oil. Especially when oil goes up. Today 1.58 a gallon.

What's 'nonexistant'? It ranges from @$.25 to $.$.64/gallon. (http://www.californiagasprices.com/tax_info.aspx)

What's 'nonexistant'? It ranges from @$.25 to $.$.64/gallon. (http://www.californiagasprices.com/tax_info.aspx)
Compare that to the $4 per gallon in taxes alone the Euros have to pay (or had during oil price peak).

Not at all. AA, Virgin, Delta.

I take it you haven't actually flown on AA or Delta. I assure on this evenings flight, I will get no frills.


Fact. The majority of gas price is oil.

Which doesn't address the point.

http://www.virginiagasprices.com/index.aspx?fuel=C
http://www.virginiagasprices.com/index.aspx?fuel=D
Gasoline $1.82 to $2.88; diesel $1.79 to $2.99, within the same state.

That's far from "exact same price". For diesel, it's almost a 2-fold difference.

That doesn't quite say what you think it says. It didn't say prices never change, now did I? Are you claiming that I can find one station charging 1.79 or thereabouts and another nearby station charging 2.99 at the same time?

For example, you showed that at approximately one Exxon was charging 1.89 for diesel while another was charging 2.65. You're right that's far from the exact same price. It also doesn't demonstrate competition. Moreso, it makes your "90% of gas prices is oil" into outright bullshit, given that's a more than 10% difference from the same company.

You put up a link that is over 36 hours. Show me two stations with that big of a difference near one another at the same time, and you'd have a point. It wouldn't, of course, address what every person in America knows... if you drive up to a gas station that 99% all the other stations in the area will have identical prices. There's the occasional outlier of course, but you're seriously desperately reaching.

Rather than addressing the fact, you're actually trying to pretend like it's not true. Seriously. Just silly.


Yeah, well. Create your own that will have free overdraft. Except you won't. Industries tend to have similarities in charging style.

Why? There are dozens of ways to make money in banking. Why would they all choose the same way? It wasn't always that way. It's not that way at drycleaners. It's not that way nail salons. It's not that way in tons of industries. What is so special about banks that they can't help but gouge me in exactly the same ways at every major branch?

My thought is... if you're too big to fail, you're too big, period. There's a reason why monopolies and oligopolies are bad for industry. These idiots begged us to allow them to form and are now telling us we're forced to save them because they formed them. What say you?
I don't know if monopolies and oligopolies are always bad. They do seem to be natural products of the market (further suggesting that the "free market paradise" of perfect competition is a myth anyway) and if you're doing something like making automobiles, you need to be really big for the business to be profitable. I do object to the government then treating these companies like they are mom and pop stores. They aren't; they are very powerful and potentially very useful enterprises that need more supervision and regulation than the bakery on the corner. I think that's the problem, not that they exist, but that we aren't willing to acknowledge they don't work same way as smaller companies.

It didn't work for Rik Waller and it won't work for America.

Interestingly enough, though a little off topic, at the point when the gas prices were coming down and dropping below $2.00 here, there was a BP station at a major intersection in my area that dropped its prices to near where the average price in the area was. However immediately across the street (you could throw a stone from one parking lot to the other) was an Exxon station whose price never once dropped below $1.99 (and still hasn't, even though the prices are lower right across the street).
I could not, and still can't, seem to figure out why. Especially since it still got quite a few customers.

It all has to do with the price they get from their suppliers. One thing I learned a long time ago is that their is a different price from suppliers as there are gas stations. It's a fairly complicated thing.

Jocabia's posts seem a bit jacked-up on anger and losing a little coherence as a result, but in general I agree with him. The current model of big business is corrupt, plain and simple, and has never been anything but corrupt. Never anything but a con.

It is the same model that anti-trust and anti-monopoly laws were created to destroy. It is supported by the same individuals in industry and politics (and they span the parties, btw) who have been lobbying, successfully, to destroy those laws and their related regulations and regulatory agencies since that fucker Reagan was in the White House. Its sole purpose is to clear the way for the few to pillage industry and the economy for fast profits today, and all other considerations be damned. We see the results today. We also saw the results in 1929 and the 1800s before that and throughout the industrial revolution. It is piracy -- and not the teen-angsty-music-junkie kind, but rather flat-out thievery and grift.

And the consumers have been the clueless marks, nodding and muttering "That sounds logical" while these hucksters have talked us out of trillions of dollars over the years and are trying to talk to us out of trillions more now.

Fuck them, say I. No bailout of any company over a certain size should be done unless it involves regulatory control and the ultimate end of breaking up the company into smaller, more sustainable and INDEPENDENTLY OWNED parcels. At the end of this process there should be no AIG, nor anything even remotely like it.

AIG and their ilk say they are too big to fail? Well, that's tragic as well as erroneous, because they very obviously already have failed. The only thing left to try to save are the workers and investors/depositors, and that "saving" should only be a matter of giving them a little more time to get other jobs and move their money to other financial service providers before they lose everything. But save AIG? No fucking way. If the government doesn't kill it, then the consumers should, by never doing business with it or anyone associated with it again.

And if that means we have to start working on a kind of alternative economy -- and that we might have to stop making fun of the hippy-granola lifestyle for a while -- then so be it. Whatever the inconvenience, "We the People" need to stop listening to these con-artists who are only out to keep separating us from our money.

I am still wondering when they will nationalize Citibank and Bank of America.

Jocabia's posts seem a bit jacked-up on anger and losing a little coherence as a result.

Probably didn't get a lolly the last time he went through the bank drive through. I can understand that anger. :wink:

It all has to do with the price they get from their suppliers. One thing I learned a long time ago is that their is a different price from suppliers as there are gas stations. It's a fairly complicated thing.

Ah, I guess that makes sense.

I take it you haven't actually flown on AA or Delta. I assure on this evenings flight, I will get no frills.
Or maybe you haven't ever flown a real no-frills without seat numbers and a limit of ten pounds of luggage.


Are you claiming that I can find one station charging 1.79 or thereabouts and another nearby station charging 2.99 at the same time?

And why do you want that? I know, so that you'll go to the $1.79 one. And so will I. And so will everybody else.

Fill-up isn't a restaurant. You don't indulge in the pleasures of gasoline's fine flavor in a beautiful romantic interior. You just fill her up and go. Regular is regular. The only measure to compare is price. Except when there are lines.


Moreso, it makes your "90% of gas prices is oil" into outright bullshit, given that's a more than 10% difference from the same company.
No, it doesn't. I, obviously, referred to the minimum available price, not the overcharge for filling up in the busiest spot.


Show me two stations with that big of a difference near one another at the same time, and you'd have a point.
No, explain me why do you think such stations should exist.


Why? There are dozens of ways to make money in banking. Why would they all choose the same way?
Overdrafts aren't intended just as a way to make money. They are a penalty.

There are dozens of ways to punish people for misdemeanors. Why do virtually all countries choose fines and jail?

By the way, Jocabia, I refuse absolutely to do business with any national or international bank. Obviously, because of the way finance works, all banks are doing business with each other, so any banking I do will somehow, in some tiny way, benefit banks I don't like. But I choose not to deal directly with organizations like those backstabbing motherfuckers Bank of America or any of their sort. Instead, I deal with stable local "community banks" -- which, by the way, I heard some financial reporter on MSNBC last week mention in passing are the only banks currently not in severe financial trouble. I choose my banks based on their annual reports, their long-term historical stability, the kinds of services they provide (both the kind I want and the kind I don't want to see on offer), their relative lack of fees, and their regional networks with similar banks. If necessary, I will have accounts in multiple banks in different regions to facilitate my own convenience.

It is not as automatically convenient as just popping into any BoA ATM, but it can be done. And should be, in my opinion.

Probably didn't get a lolly the last time he went through the bank drive through. I can understand that anger. :wink:
I currently use a stable, medium-sized, regional savings bank that has only a few branches, no off-site ATMs, but has a strong, stable history, just published its annual report showing a sound reserve, is part of a regional bank ATM network that reduces fees for me, and is doubly insured by both the FDIC and a regional bank-consortium-run deposit insurance fund. They charge almost no fees for anything, and even though it is often inconvenient for me to have to go downtown to the only branch in Boston to conduct my business with them, they always have lollies at the teller windows. :D

Jocabia's posts seem a bit jacked-up on anger and losing a little coherence as a result

I wasn't that angry, honestly. It was more that I was having trouble sleeping despite being exhausted. It was pretty funny reading it this morning.

Or maybe you haven't ever flown a real no-frills without seat numbers and a limit of ten pounds of luggage.

You're right. If only I'd get a little more experience flying. How many flights will you be on this week? How many different airlines will you purchase tickets on this year?

And why do you want that? I know, so that you'll go to the $1.79 one. And so will I. And so will everybody else.

Fill-up isn't a restaurant. You don't indulge in the pleasures of gasoline's fine flavor in a beautiful romantic interior. You just fill her up and go. Regular is regular. The only measure to compare is price. Except when there are lines.

There actually can be a difference in the quality of gasoline. Any mechanic will tell you that. So will most people driving around.

Do you think if I asked the various companies they'd tell you there is no difference between products? Why do fruit rings cost less than Fruit Loops? They're sitting right next to one another on the shelf? It's almost like marketing can increase the value of/demand for a product. I know, it's a crazy concept.


No, it doesn't. I, obviously, referred to the minimum available price, not the overcharge for filling up in the busiest spot.[/QUOTE]

What? The hell you say. According to you, 90% of gas prices is oil. I take you're amending that pile of crap, huh?

No, explain me why do you think such stations should exist.

Yeah, who wants competition, right?


Overdrafts aren't intended just as a way to make money. They are a penalty.

There are dozens of ways to punish people for misdemeanors. Why do virtually all countries choose fines and jail?

Unsurprisingly, they often choose different crimes, different levels for considering each crime, different combinations of all the reasonable punishments for each crime, etc. They take circumstances into account. They take a variety of information into account.

Overdrafts are very much intended as a way to make money. Every national bank I've worked with will run your transactions through biggest to smallest. Why? According to me, it's because they can collect the most fees that way (the big transaction puts you over and then they get to overdraft all the transactions). According to them, it's because the big ones are more important things, like rent and car payments. Why that would matter when they're paying all of them, I don't know. Nor do they.

Incidentally, I don't particularly like doing business with banks that are out to punish me. (For the record, I've not had an overdraft in about three years.)

Compare that to the $4 per gallon in taxes alone the Euros have to pay (or had during oil price peak).
Anyone remember how a few years back the talking point was that gas was expensive only because of the massive tax on it. And that the government had to lower it?

By the way, Jocabia, I refuse absolutely to do business with any national or international bank. Obviously, because of the way finance works, all banks are doing business with each other, so any banking I do will somehow, in some tiny way, benefit banks I don't like. But I choose not to deal directly with organizations like those backstabbing motherfuckers Bank of America or any of their sort. Instead, I deal with stable local "community banks" -- which, by the way, I heard some financial reporter on MSNBC last week mention in passing are the only banks currently not in severe financial trouble. I choose my banks based on their annual reports, their long-term historical stability, the kinds of services they provide (both the kind I want and the kind I don't want to see on offer), their relative lack of fees, and their regional networks with similar banks. If necessary, I will have accounts in multiple banks in different regions to facilitate my own convenience.

It is not as automatically convenient as just popping into any BoA ATM, but it can be done. And should be, in my opinion.

It's not about convenience. I used a lovely bank called Busey for a very long time. However, I travel from state to state, tiny municipality to tiny municipality, and often have to do business while on the road. I've been put in some pretty bad positions by not being part of a national bank, simply because of relatively new laws about what you can accomplish over the phone. Unsurprisingly, my overseas friends don't have the same trouble even when traveling from nation to nation.

By the by, even if I had to set myself on fire to prevent it, I won't do business with BoA.

It's not about convenience. I used a lovely bank called Busey for a very long time. However, I travel from state to state, tiny municipality to tiny municipality, and often have to do business while on the road. I've been put in some pretty bad positions by not being part of a national bank, simply because of relatively new laws about what you can accomplish over the phone. Unsurprisingly, my overseas friends don't have the same trouble even when traveling from nation to nation.

By the by, even if I had to set myself on fire to prevent it, I won't do business with BoA.
What about online services? Obviously, I don't know what kinds of transactions you are trying to do remotely, but if it is a matter of managing accounts, transferring funds, and authorizing deposits or payments, I would think you should be able to do that.

For example, my bank, Salem Five (officially shortened from Salem Five Cents Savings Bank) offers (at no fee!) online banking that account holders can use for nearly all of the bank's regular services, and which is accessible from anywhere in the world. In addition, their ATM/debit cards, issued by Mastercard, can be used globally in any ATM or as a credit card. I believe such a level of card services are normal now, and that an increasing number of banks on the level of Salem Five are offering similar online services, though more often with a monthly fee.

Also, in my personal opinion -- and again, not knowing what kinds of transactions you need to do -- I would prefer to pay fees to have one local bank deal directly with my bank in another region for me (as with fund transfers, etc), than be a depositor with BoA or their ilk. Fuck, with fees like what BoA charges for just about everything, it would not be much more expensive to do it that old fashioned way.

EDIT: Anyway, like I said, I don't know what kinds of transactions you need to do when traveling, so my ideas may have no relevance at all. The point I want to make is that where there is a will, there is a way, and if you want to not be held hostage to the big bank system, there are ways to avoid or at least severely minimize your involvement in it.

There actually can be a difference in the quality of gasoline. Not only there can, but there is.
However, for regulation-compliant fuel, the difference is nowhere near enough to get the bulk of people to pay substantially more for the same grade of gas in the same place.
Most people simply don't care enough, and often rightly so.


It's almost like marketing can increase the value of/demand for a product.
It can, it even works a bit with gas. A little bit. It's not the kind of product you have to heavily advertise to sell.


What? The hell you say. According to you, 90% of gas prices is oil. I take you're amending
Yes, I am, 90% was an exaggeration. Nonetheless, the majority of gas price is oil. It was especially so before the recession, which is coincidentally the time when I actually cared about gas prices.


Yeah, who wants competition, right?
There is competition and there is idiocy.


Overdrafts are very much intended as a way to make money. Every national bank I've worked with will run your transactions through biggest to smallest. Why?
Every bank wants to get as much out of you as they can, it's what they do. More broadly, everyone wants to get as much as possible out of everyone else.

If that's a problem (for you it isn't, for me neither), play the game, use your options. Opt out of overdraft, use credit, take another available service.

Not only there can, but there is.
However, for regulation-compliant fuel, the difference is nowhere near enough to get the bulk of people to pay substantially more for the same grade of gas in the same place.
Most people simply don't care enough, and often rightly so.

That's odd, since I know lots of people who swear by certain brands.


It can, it even works a bit with gas. A little bit. It's not the kind of product you have to heavily advertise to sell.

And, yet, they do heavily advertise. Someone should tell them it doesn't matter. Should you do it or should I?


Yes, I am, 90% was an exaggeration. Nonetheless, the majority of gas price is oil. It was especially so before the recession, which is coincidentally the time when I actually cared about gas prices.

So you exaggerated your argument? I don't believe it. It's almost like you were trying to shut down the real argument with bullshit. But you'd never do that, would you?

There is competition and there is idiocy.

Ah, right. And it's idiocy when you don't see the point. Noted. Irrelevant, but noted.


Every bank wants to get as much out of you as they can, it's what they do. More broadly, everyone wants to get as much as possible out of everyone else.

If that's a problem (for you it isn't, for me neither), play the game, use your options. Opt out of overdraft, use credit, take another available service.

Yes, and unsurprisingly, they've discovered that when the government doesn't enforce regulations against anti-trusts and bad practice, they can get a lot more out of us. And, then, magically when they're behaving badly and the whole lot of them end up screw, they manage to get even more out of us. It's almost like there is something wrong with this system. Now, I wonder if someone started a thread about such a thing.

As far as other options, many, many people are going to run into overdrafts from time to time. It's the nature of the beast, particularly in a bad economy. If you're a loan company, charging 1000% in fees for a loan of a couple of dollars would be grossly illegal. Of course, it's perfectly legal if you're a bank. Again, it's almost like the people who are supposed to regulate them stopped doing their job. It's a crazy suggestion, I know.

I wonder by the way, if anyone has anything to say on the actual topic of the thread. Can you be too big to fail and not also be admitting to being too big to be in the interest of the American people?

That's odd, since I know lots of people who swear by certain brands.
When you need a new car, you can take your time to choose and get it new or used, any condition, any brand you like, the exact model you prefer.

When you're nearly out of gas near a Shell station, you're not exactly going to walk to the Exxon one with a can.


And, yet, they do heavily advertise. Someone should tell them it doesn't matter. Should you do it or should I?
I'll leave that duty to you. Note that all this advertising allows for is a few cents price increase. A very small change. Only the massive sales volume can make it pay off, and I'm not sure it does.


So you exaggerated your argument? I don't believe it.
Believe what you want. When someone says "99%", "90%", it's not necessarily a precise notation of (99.0 +/-0.5)%, but sometimes also a quicker way of saying "vast majority".


Ah, right. And it's idiocy when you don't see the point. Noted. Irrelevant, but noted.
It's idiocy when it's idiocy. Having two stations across the street selling pretty much the same fuel for greatly different price is not "competition", it's just impractical. If the high-price pump isn't out of business in a month, it's a sign that the lower-price pump should raise their prices, or have their manager fired.

The goverment has antitrust laws. They have an obligation to enforce them,
No, it doesn't. In fact, it has an obligation to refrain from enforcing them, because they're an illegitimate violation of sacred freedom of association that is unacceptable under any circumstances or for any reason.

No, it doesn't. In fact, it has an obligation to refrain from enforcing them, because they're an illegitimate violation of sacred freedom of association that is unacceptable under any circumstances or for any reason.

That freedom can go fuck itself.

I wonder by the way, if anyone has anything to say on the actual topic of the thread. Can you be too big to fail and not also be admitting to being too big to be in the interest of the American people?
I kind of suggested in one of my earlier posts that "too big to fail" is a lie, because all of these assholes are failing/have already failed right now. These are not functioning companies that we are trying to keep functioning. These are collapsing monsters who we are just trying not to have land on our heads with their bloated dead carcasses.

The fact that reputable economists are saying that if companies like AIG collapse all of a sudden, it would have a catastrophic ripple effect on the general economy is strong evidence that "too big to fail" is bad for the interests of the American people and of the global economy. Governments should not be allowing their nations' economies to be so dependent on just a few entities to keep them afloat.

It is my opinion that none of the monster companies that are currently being bailed out should be left intact. They should be nationalized and forcibly broken up.

It's probably just coincidence that it makes using a local bank nearly impossible for me and anyone like me. The government never makes laws that intentionally benefit the giants. It would be silly to suggest otherwise.
Well, the point is that until relatively recently, in the US there were laws against banks growing beyond state borders. The few national banks only managed to become national after these laws were lifted, or by coming up with elaborate schemes to get around the regulations.

Those were billed as anti-monopoly laws, but it ultimately only served to inconvenience people who crossed state lines and to make the banks smaller, more unstable (because they couldn't diversify their loan portfolios) and less able to compete with the GSEs.

Anyways, my point is just that in the US there are 8,400 banks. In Australia there are less than a dozen. So you complaining about monopoly power of giant American banks rings a little bit hollow to me.

It is not as automatically convenient as just popping into any BoA ATM, but it can be done. And should be, in my opinion.
And isn't the fact that it can a hint that maybe there are no banks with significant monopoly power in the US?

I kind of suggested in one of my earlier posts that "too big to fail" is a lie, because all of these assholes are failing/have already failed right now.
I think we've all been looking at "too big to fail" from the wrong angle. It's not about any single organisation, it's about the system as a whole. As you pointed out before, all of these banks are integrated into a network of repo contracts, investments, securitisations and so on. I found a paper the other day that modelled a system like that fairly accurately, and it ultimately doesn't matter what size the first point of failure is. Even a small default quickly becomes very big, and as soon as the vital nodes are hit even such a system made up entirely of tiny community banks could go down.

And isn't the fact that it can a hint that maybe there are no banks with significant monopoly power in the US?
That is Jocabia's argument, not mine. I have stated that I am opposed to the national banks because I do not like the way they do business. I do not know enough about any given national bank to state whether it is holding a monopoly or whether the national banks engage in trust building. I do not intend to either attack or defend that part of J's argument.

I think we've all been looking at "too big to fail" from the wrong angle. It's not about any single organisation, it's about the system as a whole. As you pointed out before, all of these banks are integrated into a network of repo contracts, investments, securitisations and so on. I found a paper the other day that modelled a system like that fairly accurately, and it ultimately doesn't matter what size the first point of failure is. Even a small default quickly becomes very big, and as soon as the vital nodes are hit even such a system made up entirely of tiny community banks could go down.
Then the system contains a fatal flaw that needs to be fixed. We can start by reimposing and enforcing the regulatory rules that are supposed to prevent such a domino effect from happening.

I kind of suggested in one of my earlier posts that "too big to fail" is a lie, because all of these assholes are failing/have already failed right now. These are not functioning companies that we are trying to keep functioning. These are collapsing monsters who we are just trying not to have land on our heads with their bloated dead carcasses.

The fact that reputable economists are saying that if companies like AIG collapse all of a sudden, it would have a catastrophic ripple effect on the general economy is strong evidence that "too big to fail" is bad for the interests of the American people and of the global economy. Governments should not be allowing their nations' economies to be so dependent on just a few entities to keep them afloat.

It is my opinion that none of the monster companies that are currently being bailed out should be left intact. They should be nationalized and forcibly broken up.

Indeed. Too big to fail is code for too powerful to fail.

I would agree that theoretically there are arguments for economy of scale, and that again, in theory, massive financial service companies should be more stable and efficient. But that of course assumes that robots or somesuch are in charge.

The reality is, however, that greedy fallible humans are in charge, and the temptation to abuse such a position is too great. So there is a very strong case that some of the theoretical gains that could be made from consolidation and size should be forgone to ensure greater long term stability.

So sure, we'll have to pay more at the atm, and maybe we have to pay more for mortgage interest. But on the other hand, badly managed firms won't have the influence that requires that they get bailed out. In other words, we sacrifice potential economic growth for longer term stability.

It's what happened in the 1930s, and it worked pretty well from 1945 till 1992.

I think we've all been looking at "too big to fail" from the wrong angle. It's not about any single organisation, it's about the system as a whole. As you pointed out before, all of these banks are integrated into a network of repo contracts, investments, securitisations and so on. I found a paper the other day that modelled a system like that fairly accurately, and it ultimately doesn't matter what size the first point of failure is. Even a small default quickly becomes very big, and as soon as the vital nodes are hit even such a system made up entirely of tiny community banks could go down.

Your point is well taken. It's not about absolute size, or even banks per se, but rather interconnectedness.

That said, it's still true that some institutions can be allowed to fail - I don't think anyone would blink if Astoria Federal Savings collapsed - whereas others are too interlinked with the rest of the financial system to allow it. Imagine the chaos if the plug was actually pulled on Citi.

So I think it's a matter of putting the firewalls back up. Commercial and I-banking should be divorced from each other. And there should be re-supervision of the financial sector.

I would agree that there is a need for private equity functions, and risky speculation, but access to that sort of thing should be limited, and kept well away from the general public.

no such thing as "too big to fail" - you screw up, you fail. Better companies with better business models take over.

Then the system contains a fatal flaw that needs to be fixed. We can start by reimposing and enforcing the regulatory rules that are supposed to prevent such a domino effect from happening.So I think it's a matter of putting the firewalls back up. Commercial and I-banking should be divorced from each other. And there should be re-supervision of the financial sector.
I'm not actually sure the institutional connection between commercial banking and I-Banking is necessarily at fault. Whether Citi racks up the debt itself and then can't lend, or Bear Stearns racks up the debt and then causes a seizure in the interbank markets the commercials needs to keep lending, it comes out the same thing.

So the only thing you can do is actually prevent retail banks and investment banks from being connected in any way through contracts. That would certainly be a massive change, and in terms of funding costs probably for the worse. You'd also have to change the structure of retail banking in the US, because as it is these tiny banks can only exist because of access to securitisation markets and other low-cost money provided or organised by Wall Street. So more consolidation (meaning precisely the opposite of what's been suggested in this thread so far) and making the GSEs disappear.

As for supervision, I'm still not entirely sure how that would help. I mean, regulators knew about the subprime-backed stuff, and SIVs and CDOs. It wasn't like that stuff was secret, right? It was just that regulators, just like most others, weren't thinking outside the box (or their little "historical volatility" spreadsheet). But it would of course be useful to prevent things like the Madoff affair - though the impression I got from that is that it wasn't a lack of legal power, more a lack of sufficiently motivated staff at the SEC.

NL, in all seriousness, I have little interest in excuses for why we can't or shouldn't change the system or why it's all got to be kept on an even keel or why it really isn't this one's fault or that one's fault, blah, blah, blah. The bottom line is that the system has collapsed. It collapsed due to flaws in its design. Propping it up again and keeping it running would be stupid because it was a bad system to begin with. I agree with Lacadaemon that firewalls need to be reestablished and expanded. I agree that serious regulation has to be imposed. And I stand by my original argument that the giant entities that are the major problems now should be destroyed in a controlled way to clear the way for others.

I agree with Lacadaemon that firewalls need to be reestablished and expanded. I agree that serious regulation has to be imposed.
And I'm not necessarily disagreeing. I'm just wondering about the details, because those are what makes or breaks this. It's easy to say "we need regulations", but at the very least you should have a clear idea in mind on what exactly you want those regulations to do, and how they should be doing it.

And I stand by my original argument that the giant entities that are the major problems now should be destroyed in a controlled way to clear the way for others.
I made the same point a few weeks ago. But I don't think size has much to do with it. In the retail banking sector, it looks to me like the players are actually too small rather than too large. And I think the way investors will be looking at investment banking once the smoke clears will dictate an end to the massive growth across all businesses that some of the big Wall Street firms have been getting away with.

But those considerations are again separate from questions about supervision and disclosure. And though I think the Basel II risk-adjusted capital requirements system has failed spectacularly and needs to be overhauled ASAP, I think other than that the current regulatory framework doesn't need that much changing. The big items at the centre of why this happened need to be improved, but that's no cause for a blanket rewriting of everything, especially if it's motivated by a desire to get volume down and try to keep markets under wraps for fear of what they could do in the future.

I'm not actually sure the institutional connection between commercial banking and I-Banking is necessarily at fault. Whether Citi racks up the debt itself and then can't lend, or Bear Stearns racks up the debt and then causes a seizure in the interbank markets the commercials needs to keep lending, it comes out the same thing.

It goes back to what we were talking about last year. The commercial deposits can be used to bolster the credit rating of the issuer. So it's really an illegitimate transfer of risk to the taxpayer. So as I said, GS, and MS decided to become bank holding companies.

I'd say a better model would be traditional commercial banking, then I-banking as private partnerships. So if you are in the buy to originate field the risk is squarely aligned with the people doing the credit risk. Yeah, it means that the vast pots of money in I-banking will be cut off from the general public, but on the other hand, it will put the risk back with the people who profit.

I'd guess what I am saying is that I am trying to find a system where interests are aligned - unlike now. I'm open to other ideas of course.

So the only thing you can do is actually prevent retail banks and investment banks from being connected in any way through contracts. That would certainly be a massive change, and in terms of funding costs probably for the worse. You'd also have to change the structure of retail banking in the US, because as it is these tiny banks can only exist because of access to securitisation markets and other low-cost money provided or organised by Wall Street. So more consolidation (meaning precisely the opposite of what's been suggested in this thread so far) and making the GSEs disappear.

Nah, tiny banks can and do exist as credit unions and S&Ls, they portfolio. Granted that's been massively diminished over the years, but that's how it used to be. I don't disagree that the cost of money goes up, and there is far less access to credit which in turn puts downward pressure on asset prices but so what? It's arguably more stable.

As for supervision, I'm still not entirely sure how that would help. I mean, regulators knew about the subprime-backed stuff, and SIVs and CDOs. It wasn't like that stuff was secret, right? It was just that regulators, just like most others, weren't thinking outside the box (or their little "historical volatility" spreadsheet). But it would of course be useful to prevent things like the Madoff affair - though the impression I got from that is that it wasn't a lack of legal power, more a lack of sufficiently motivated staff at the SEC.

Well, quite. Lack of active supervision. It's obvious that the sum total of the value of securitized mortgages is less than the mortgages underlying them. Stands to reason. Now there are good reasons to take that hit, but frankly that wasn't the case.

Nobody cared. So when I say lack of supervision, it goes back to the insufficiently motivated staff. I'm not arguing for more regulation. Just the current rules to be enforced. (With the caveat that I want I-banking and commercial banking split).

Look, it was criminal insanity. Everybody knew it. But nobody cared because it was all very convenient, and nobody imagined that they would be the bagholders.

A few adults it all I'm asking for.

(Also, it wasn't just mortgages).

And I'm not necessarily disagreeing. I'm just wondering about the details, because those are what makes or breaks this. It's easy to say "we need regulations", but at the very least you should have a clear idea in mind on what exactly you want those regulations to do, and how they should be doing it.


I made the same point a few weeks ago. But I don't think size has much to do with it. In the retail banking sector, it looks to me like the players are actually too small rather than too large. And I think the way investors will be looking at investment banking once the smoke clears will dictate an end to the massive growth across all businesses that some of the big Wall Street firms have been getting away with.

But those considerations are again separate from questions about supervision and disclosure. And though I think the Basel II risk-adjusted capital requirements system has failed spectacularly and needs to be overhauled ASAP, I think other than that the current regulatory framework doesn't need that much changing. The big items at the centre of why this happened need to be improved, but that's no cause for a blanket rewriting of everything, especially if it's motivated by a desire to get volume down and try to keep markets under wraps for fear of what they could do in the future.
People who are defenders of (and, frankly, increasingly apologists for) the financial industry always whine about the details. The details are clear. They were in the law before Reagan. Essentially, I would like us to basically erase everything the rightwing has done in the US since 1980. For starters.

People who are defenders of (and, frankly, increasingly apologists for) the financial industry always whine about the details. The details are clear. They were in the law before Reagan. Essentially, I would like us to basically erase everything the rightwing has done in the US since 1980. For starters.
But don't you think the world, and the US economy, has changed just a little bit since 1980?

The fact of the matter is that the law pre-Reagon wouldn't cover the majority of the products, services and structures that could potentially exist today. I really don't think you can escape the need to actually spell out what you want to do that easily.

I wasn't that angry, honestly. It was more that I was having trouble sleeping despite being exhausted. It was pretty funny reading it this morning.

My money was on you being a wee bit tipsy. I'm a tad disappointed I was wrong.

Nationalize them.

And I stand by my original argument that the giant entities that are the major problems now should be destroyed in a controlled way to clear the way for others.


^This.

Especially because any money we give them to 'save' them will go straight to their incompetent CEO's pockets. Now, for the bourgeoisie apologists (there is no other word I can think of that has as much venom), that seems perfectly all right.

To the sane among us, who care for people other then the ultra rich, its a travesty.

But don't you think the world, and the US economy, has changed just a little bit since 1980?

The fact of the matter is that the law pre-Reagon wouldn't cover the majority of the products, services and structures that could potentially exist today. I really don't think you can escape the need to actually spell out what you want to do that easily.
It has changed tremendously as a direct result of the dismantling of the regulatory structures that kept it (relatively) honest and balanced. It has become a cesspit of corruption, incompetence and fraud.

I have spelled it out. I want firewalls to prevent combinations of services that are really just masks for conflicts of interest. I want enforcement of regulations that carry significant penalties, up to and including criminal charges where necessary, for violation of fiduciary responsibility on the parts of executives and directors. I want government regulation and programs of tax incentives and tax penalties to prevent corporations from becoming as big and as invasive as AIG. And I want the AIG-type companies that are currently or soon will be undergoing bailout to be evaluated and if found to be "too big to fail", I want them broken up and sold off in parcels to independent buyers who must agree to limitations on their business for limited periods of time to discourage reconglomeration under the same people who caused this mess in the first place. I want enforcement of anti-trust and anti-monopoly laws to open the field a little to competition. I want "too big to fail" to be a condition that mandates the forcible break-up of a corporate entity.

I don't think that will be easy. I don't care if it is not easy. I don't care if it is disruptive and shocking in the short or even medium term. And I really, really don't give a flying fuck if it would be inconvenient for the pisswits who think things have to run the way Saint Reagan prophecied.

Clear enough for you yet?

You are starting to irritate me because you are starting to sound like those loons on the news who keep insisting we should do nothing about the current crisis. Those people make me wonder how anyone so stupid could get to be that crazy, since they don't seem to have enough mind to have anything to derange. You're not one of those people, are you?

It has changed tremendously as a direct result of the dismantling of the regulatory structures that kept it (relatively) honest and balanced.

I have spelled it out. I want firewalls to prevent combinations of services that are really just masks for conflicts of interest. I want enforcement of regulations that carry significant penalties, up to and including criminal charges where necessary, for violation of fiduciary responsibility on the parts of executives and directors. I want government regulation and programs of tax incentives and tax penalties to prevent corporations from becoming as big and as invasive as AIG. And I want the AIG-type companies that are currently or soon will be undergoing bailout to be evaluated and if found to be "too big to fail", I want them broken up and sold off in parcels to independent buyers who must agree to limitations on their business for limited periods of time to discourage reconglomeration under the same people who caused this mess in the first place. I was enforcement of anti-trust and anti-monopoly laws to open the field a little to competition. I want "too big to fail" to be a condition that mandates the forcible break-up of a corporate entity.

Clear enough for you yet?

You are starting to really irritate me because you are starting to sound like those loons on the news who keep insisting we should do nothing about the current crisis. Those people make me wonder how anyone so stupid could get to be that crazy, since they don't seem to have enough mind to have anything to derange. You're not one of those people, are you?


Fatality!!

It has changed tremendously as a direct result of the dismantling of the regulatory structures that kept it (relatively) honest and balanced. It has become a cesspit of corruption, incompetence and fraud.

I have spelled it out. I want firewalls to prevent combinations of services that are really just masks for conflicts of interest. I want enforcement of regulations that carry significant penalties, up to and including criminal charges where necessary, for violation of fiduciary responsibility on the parts of executives and directors. I want government regulation and programs of tax incentives and tax penalties to prevent corporations from becoming as big and as invasive as AIG. And I want the AIG-type companies that are currently or soon will be undergoing bailout to be evaluated and if found to be "too big to fail", I want them broken up and sold off in parcels to independent buyers who must agree to limitations on their business for limited periods of time to discourage reconglomeration under the same people who caused this mess in the first place. I was enforcement of anti-trust and anti-monopoly laws to open the field a little to competition. I want "too big to fail" to be a condition that mandates the forcible break-up of a corporate entity.

I don't think that will be easy. I don't care if it is not easy. I don't care if it is disruptive and shocking in the short or even medium term. And I really, really don't give a flying fuck if it would be inconvenient for the pisswits who think things have to run the way Saint Reagan prophecied.

Clear enough for you yet?

You are starting to irritate me because you are starting to sound like those loons on the news who keep insisting we should do nothing about the current crisis. Those people make me wonder how anyone so stupid could get to be that crazy, since they don't seem to have enough mind to have anything to derange. You're not one of those people, are you?

Excellent post!

Haha, it's like you are in my brain. (mostly).

Not at all. AA, Virgin, Delta.
Haven't flown Delta recently, have you? Or AA for that matter?
I've never flown Virgin, so I won't comment.

Or maybe you haven't ever flown a real no-frills without seat numbers and a limit of ten pounds of luggage.
You mean exactly like my two Delta flights today? Delta charges for all checked luggage, allows only two carry-ons, and yes, has no assigned seats on many flights. No assigned seats is particularly true on its shuttle service.

Incidentally, I believe it was Delta that a few years back saved literally millions of dollars by eliminating one olive from every first class salad.
I wonder by the way, if anyone has anything to say on the actual topic of the thread. Can you be too big to fail and not also be admitting to being too big to be in the interest of the American people?
I have to say that the answer is...maybe. There are just some services that are best provided by a single player. Generally, these are also services that I think should be publicly owned (mass transit, that kinda thing).

I don't think any private entity should hold so much power that it simply cannot be allowed to fail, particularly in essential services.

Excellent post!

Haha, it's like you are in my brain. (mostly).
I know. How scary is that? I have a vague recollection of not agreeing with you about things before the world came crashing down (I might be wrong about that; it's so hard to keep track of everyone I disagree with). I guess you find out who you really disagree with and who you just differ with on points, when the outcome of the debate really matters.

Also, inside your head...it's getting little musty. Crack a window, 'k? And I think maybe it's time for some new carpet.

It has changed tremendously as a direct result of the dismantling of the regulatory structures that kept it (relatively) honest and balanced. It has become a cesspit of corruption, incompetence and fraud.
If you're talking about the split between commercial and I-banking, then I don't think this necessarily follows. Most countries didn't have regulations like the Glass-Steagall Act in place for decades before the US abandoned it, and they didn't see this sort of thing happening.

I think in the US the biggest problem is regulatory capture, where the regulators are either ex-bankers or people who would have liked to be bankers but couldn't for some reason. More regulations wouldn't help that, only a complete overhaul of the people and the organisational culture in the agencies themselves might.

I have spelled it out. I want firewalls to prevent combinations of services that are really just masks for conflicts of interest.
So no originate-to-distribute, for example? How do you propose mortgage securitisation should be handled in the future?

I want enforcement of regulations that carry significant penalties, up to and including criminal charges where necessary, for violation of fiduciary responsibility on the parts of executives and directors.
No disagreement here.

I want government regulation and programs of tax incentives and tax penalties to prevent corporations from becoming as big and as invasive as AIG.
That's not a size thing though. AIG wasn't a problem because it is big - the majority of it is a reasonably healthy company. It was one department within it that managed to be such a problem. That comes back to Lacadaemon's point about using a big balance sheet to take on credit risk, but dividing different forms of business from each other would be enough to fix that.

And I want the AIG-type companies that are currently or soon will be undergoing bailout to be evaluated and if found to be "too big to fail", I want them broken up and sold off in parcels to independent buyers who must agree to limitations on their business for limited periods of time to discourage reconglomeration under the same people who caused this mess in the first place.
But if something is found "too big to fail", then it is because it sits at the centre of a huge web of cross-liabilities already. How would you propose to break up an entity like that, how would you decide which part has to pay which liabilities, and what if some parts just plain couldn't, like AIG's CDS department?

As I said before, it's not about size, it's about the degree of interconnectedness. That doesn't mean there's nothing that can be done, but it does mean that simply breaking up companies because of size is not the answer.

You are starting to irritate me because you are starting to sound like those loons on the news who keep insisting we should do nothing about the current crisis. Those people make me wonder how anyone so stupid could get to be that crazy, since they don't seem to have enough mind to have anything to derange. You're not one of those people, are you?
I'm not, and I think you haven't been listening to the things I've been saying ever since this thing started. I've been proposing one government action after another, or at least describing to people what is going on is as much detail as possible. It's true that I've also been spending a lot of time telling people why various other government actions are not a good idea, but I've tried to outline my reasons every time.

http://www.forums.jolt.co.uk/showthread.php?t=581768
http://www.forums.jolt.co.uk/showthread.php?t=584932
http://www.forums.jolt.co.uk/showthread.php?t=566035
http://www.forums.jolt.co.uk/showthread.php?t=566507
http://www.forums.jolt.co.uk/showthread.php?t=573567
http://www.forums.jolt.co.uk/showthread.php?t=570349

But the fact of the matter is that we have been running a risk, from Day One, that all of this would lead to babies being thrown out with the bath water. Every time I hear someone blame "Deregulation did it", I therefore think "What do you want to do differently?". Regulations should not be an ideological tool, they should be technocratic and results-orientated. So in analysing what actually happened, we can then hopefully see which regulations failed and where better or more regulations would be appropriate. But that doesn't mean the entire system has to go. It would be wrong to legislate out of anger, and every time anyone talks about "greed" they are not keeping a level head.

Ultimately the process that is going on now can't be stopped. It can hopefully be shortened if Citi and BofA are handled properly (but even that is speculation), but it can't be stopped. The US has too much debt backed by too many overvalued assets. Regulation isn't going to change that. So the question is what to do for a post-crisis world. I still think that the current system can be made to work if there are backstops and rules in the right places and for the right reasons, and that by constricting the financial system you are keeping capital more expensive than it should be and economic growth in the future lower than it could be.

So if you want to know my ideas, I'd look at the connection between monetary policy stance and bank leverage, I'd look at the way interconnectedness in banks is treated by capital adequacy regulations, I'd have a look at the Spanish system of capital requirements through the cycle and (if the markets don't do it by themselves) I'd split prop trading and service provision. I'd take out the remaining regulatory left-overs from the Great Depression in the mortgage market (including the GSEs) and try to promote the growth of large, national vanilla retail banks, and look at whether those should be required to keep some (potentially large) fraction of their loans on their balance sheets. And there is something to be said about Lacadaemon's idea of keeping investment banks partnerships.

I could probably come up with a lot more stuff if I spend more time thinking about it, but the basic approach is this: fix the things that went wrong, stay vigilant but otherwise rely on the fact that the people who have seen this crisis are scarred for life, just as they were after the Great Depression. It wasn't regulations that made Goldman Sachs rethink their priorities after GS Trading Corporation collapsed, it was the damage done to the image, the capital and the people responsible.

I know. How scary is that? I have a vague recollection of not agreeing with you about things before the world came crashing down (I might be wrong about that; it's so hard to keep track of everyone I disagree with). I guess you find out who you really disagree with and who you just differ with on points, when the outcome of the debate really matters.

I'm sure we did disagree on many things. But stuff like that is best kept for a rich and prosperous society. Right now, it's all about managing the downturn. Or at least making sure it can't happen again in our lifetimes. And since we are both honest people, we tend to see the same problems.

Also, inside your head...it's getting little musty. Crack a window, 'k? And I think maybe it's time for some new carpet.

Those are my carpets, and they are staying.

I'm sure we did disagree on many things. But stuff like that is best kept for a rich and prosperous society. Right now, it's all about managing the downturn. Or at least making sure it can't happen again in our lifetimes. And since we are both honest people, we tend to see the same problems.



Those are my carpets, and they are staying.
True enough.

I mean about seeing reality, not about those old carpets. :p

If you're talking about the split between commercial and I-banking, then I don't think this necessarily follows.
Oh, ye gods, make an effort to know who you are talking to, will you? This is the second time you have tried to put me on the spot to defend or explain an argument I never made. You want to talk about commercial and I-banking, talk to Lacadaemon. That was him, not me. The last time, you tried to make me speak for Jocabia. What's the matter -- you can't say anything to what I posted so you try to set me up to argue someone else's points?

Most countries didn't have regulations like the Glass-Steagall Act in place for decades before the US abandoned it, and they didn't see this sort of thing happening.
Not true. I already mentioned the 19th century and 1929. In fact, the entire history of the industrial age prior to the Great Depression went very much like what we see happening now.

I am beginning to think you are one of those people after all.

<snip a load of crap and talking points>
And the rest of your post proves it to me.

1) You repeat yourself without adding anything that would make your points appear more valid than before.

2) You continue to try to make me argue Lacadaemon's points. That's a lame tactic.

3) Your assessments of what the situation actually is are off the mark. Since, I believe you work in the financial industry, that suggests more dishonesty than ignorance to me.

So we've been watching this unfold for a while now. We've been watching giant companies join other giant companies and swallow up all the mom and pop stores around the country.

They did so with the promise of lower prices, better services, easier access, etc. And we ate it up. We were happy to support these industry giants until they drove all the competition away and we were stuck choosing between crappy banks that screw you at every turn because they have no competition, giant automakers they force out or buy up any competitors, superstores providing crappy goods and terrible service, bad service, bad food, ridiculous fees, etc.


This is the collective 'we', yes?

Because, I've been bitching about that kind of crap on this forum for half a decade. :)

This is the second time you have tried to put me on the spot to defend or explain an argument I never made.
The repeal of the Glass-Steagall Act is the single biggest piece of deregulation that was undertaken, and its main focus was the division of the two different types of businesses. So if it isn't that regulatory structure that kept things more honest, then which one are you talking about? You're not making it easy for me by essentially making me respond to generalities like that.

Not true. I already mentioned the 19th century and 1929. In fact, the entire history of the industrial age prior to the Great Depression went very much like what we see happening now.
That's not what I'm getting at. Many other countries have had banks that did commercial and retail banking, investment banking and securities services under one roof. In Germany for example, Deutsche, Dresdner and others have been doing that sort of thing since the Sixties or earlier. There was nothing like the Glass-Steagall Act in Japan, France or the UK either, IIRC.

I am beginning to think you are one of those people after all.
Correlation =/= Causation. I mean, your point regarding that particular law seems to be: when it didn't exist, and there were crises and a Depression. Therefore Glass-Steagall prevents financial crises.

Do you see how that's slightly dodgy logic if you refuse to actually delve into it any deeper than that before beginning to attack the source rather than the argument?

Your assessments of what the situation actually is are off the mark.
How?

Since, I believe you work in the financial industry, that suggests more dishonesty than ignorance to me.
I don't.

But that's not the point. I could be Bernie Madoff and it wouldn't change a thing. Either I'm right or I'm wrong, in which case there is some value in actually pointing out where and why.

The thing is that you seem to assume that when you say you want to eliminate things that essentially cause or hide conflicts of interest, I disagree. I don't. Apart from the thing about regulations aimed at keeping companies small, I actually agree with the general thrust of what you're saying (and I pointed out why I disagree where I do). But the point is that nobody is being helped by general thrusts - there are specific problems that need specific solutions. And those solutions have to be detailed, even here in this setting. Otherwise there is nothing to talk about, and no meaningful criteria to judge anything.

And just to sort this out for future reference, yes, I am defensive at times. I know a lot of people out there want to basically get rid of the financial system and replace it with something simple and harmless. I think that's a grave mistake. There are the obvious reasons, but there is also a selfish one: as far as I can tell, finance is one of perhaps two areas in the world where someone with nothing or very little can actually make it without being wiped out by the establishment. I go on about capitalism a lot, but in reality I know that Schumpeter has already been proven too correct. Finance companies are the only place where you can actually get noticed and rewarded if you do a good job, where at least for a few years they had taken conservatism as a mindset and banished it. People can create and run entire divisions at 30, just by virtue of merit. It already pissed me off more than you can imagine that so many people, especially high up, were and still are unwilling to accept the reverse and take the rightful falls. You might be able to call that capitalism and be done with it, but to me it's a personal affront. Anyways, the idea that someone could, with a pen stroke, destroy that much opportunity for no reason other than misinformed public opinion seems like something straight out of Atlas Shrugged. It doesn't matter to me what they trade, or who they trade it with. What matters is that this sort of energy and creativity can be preserved.

But as I said, what I think about all of this is completely irrelevant. The only thing that needs to matter to you or anyone else who reads my posts is what it actuallys says in them and whether it is factually correct or not.

The repeal of the Glass-Steagall Act is the single biggest piece of deregulation that was undertaken, and its main focus was the division of the two different types of businesses. So if it isn't that regulatory structure that kept things more honest, then which one are you talking about? You're not making it easy for me by essentially making me respond to generalities like that.
That is only because you cannot keep track of who you are arguing with. Lacadaemon addresses the details of the regulations because he has more familiarity with those details and can discuss them with greater ease. I rely on him to do that and refer to his posts in mine because I can read his posts and see that, as far as I know, he is correct on his facts. I see no reason why I should duplicate his work. So when you ask me for "details", I refer you to him, because I am following his lead on referring to details.

If you want to argue the details of which regulations to apply and how to apply them, argue with him. In the meantime, I take your refusal to address the points I raised and to accept the answers to your questions that I gave you as evidence that you have either no understanding of what I am saying or no counter to my argument.

To sum up: Lacadaemon is the guy who can talk about the practicalities of how to regulate. I can talk about why to regulate and about the social impact, demands, etc, of regulating now.

However, there may be little point, since it appears that you think Glass-Steagall was/is not necessary and should not be applied.

That alone is enough to disqualify you in my eyes as a person who can discuss this matter reasonably. Your claim that the kinds of problems associated with dishonest control of the markets did not exist before Glass-Steagall is patently false. Glass-Steagall was not instituted for no reason. Precisely the kinds of business and financial abuses that we see now existed before it, and have come back with a vengeance since the government stopped following it.

You apparently are one of those people after all, and I have no interest in anything you have to say about the economy. To a person who thinks that regulation is bad or impractical or whatever, while standing in the midst of the current crisis, there is only one thing that can be said to anything they might suggest about economic matters: You are wrong.

You may apply that to the entire rest of your post, which I dismiss as the blathering of an apologist, full of revisionist history, misrepresentation of issues, and strawmen.

In the meantime, I take your refusal to address the points I raised and to accept the answers to your questions that I gave you as evidence that you have either no understanding of what I am saying or no counter to my argument.
It's the former, because without understanding what you're saying I can't actually think about an answer.

Look, I tried to make it clear time and time again that I actually agree with the general notion that the system as it was is clearly broken.

But just pointing that out is hardly going to do it. You advocated going back to the regulatory framework of the pre-Reagan days. I made some suggestions, but they're not about going back, but about modifying things going forward. I outlined why, namely that I think there are a lot of babies in the bathwater that would be thrown out by a return to the old laws.

I can give you an argument (with academic papers and all) for why I think Glass-Steagall was not actually all that effective (or necessary, rather) at achieving one of its main points (trying to eliminate the conflict of interest between underwriting and commercial banking), and why I think that the current crisis could have occured in much the same way had Glass-Steagall still been in effect, ceteris paribus (thus covering the second point of the Act regarding the risk-taking of FDIC-insured institutions). But that's not the point here - the point is that you've got it into your head that this is some sort of adversarial thing, and by declaring me some form of enemy you can absolve yourself from any need to consider what I'm saying. The idea that I'm "one of those people" who want to do "nothing" about the crisis is obviously contradicted by my posts.

To sum up: Lacadaemon is the guy who can talk about the practicalities of how to regulate. I can talk about why to regulate and about the social impact, demands, etc, of regulating now.
But how can we divide the why from the how, or the social impact from the practicalities? Just regulating something doesn't mean anything gets fixed or gets better. It's theoretically possible for something to get regulated without addressing any of the actual problems such that the net effect is to make things unambiguously worse. We could ban short selling for example: absolutely no relation to the way banks operate, no effect other than to reduce market liquidity and distort prices. It happens, so my concerns aren't exactly unfounded.

Maybe that's the misunderstanding here and why you seem to think we have to be diametrically opposed. I think that the validity of any demands to regulate is derived purely from the value of the specific regulations themselves, because the effects (including any social impact) are only going to be a result thereof, no matter what the wrongdoing of the bankers or the outrage of most people. When you're talking about public demands, and Lacadaemon picks this point up frequently as well, they usually imply some sort of punishment for the people who fucked up. I agree with that (the idea that AIG's management for example presided over wealth destruction of US$27.9 million an hour and should not be held to account is just ludicrous). But that must be kept a separate issue from regulations.

It's the former, because without understanding what you're saying I can't actually think about an answer.

Look, I tried to make it clear time and time again that I actually agree with the general notion that the system as it was is clearly broken.

But just pointing that out is hardly going to do it. You advocated going back to the regulatory framework of the pre-Reagan days. I made some suggestions, but they're not about going back, but about modifying things going forward. I outlined why, namely that I think there are a lot of babies in the bathwater that would be thrown out by a return to the old laws.

I can give you an argument (with academic papers and all) for why I think Glass-Steagall was not actually all that effective (or necessary, rather) at achieving one of its main points (trying to eliminate the conflict of interest between underwriting and commercial banking), and why I think that the current crisis could have occured in much the same way had Glass-Steagall still been in effect, ceteris paribus (thus covering the second point of the Act regarding the risk-taking of FDIC-insured institutions). But that's not the point here - the point is that you've got it into your head that this is some sort of adversarial thing, and by declaring me some form of enemy you can absolve yourself from any need to consider what I'm saying. The idea that I'm "one of those people" who want to do "nothing" about the crisis is obviously contradicted by my posts.


But how can we divide the why from the how, or the social impact from the practicalities? Just regulating something doesn't mean anything gets fixed or gets better. It's theoretically possible for something to get regulated without addressing any of the actual problems such that the net effect is to make things unambiguously worse. We could ban short selling for example: absolutely no relation to the way banks operate, no effect other than to reduce market liquidity and distort prices. It happens, so my concerns aren't exactly unfounded.

Maybe that's the misunderstanding here and why you seem to think we have to be diametrically opposed. I think that the validity of any demands to regulate is derived purely from the value of the specific regulations themselves, because the effects (including any social impact) are only going to be a result thereof, no matter what the wrongdoing of the bankers or the outrage of most people. When you're talking about public demands, and Lacadaemon picks this point up frequently as well, they usually imply some sort of punishment for the people who fucked up. I agree with that (the idea that AIG's management for example presided over wealth destruction of US$27.9 million an hour and should not be held to account is just ludicrous). But that must be kept a separate issue from regulations.
We can divide the why from the how very easily -- by talking to the how person about the how and the why person about the why and taking all of their points together as a broad view on the whole issue.

To keep insisting that a person has to argue a point they were not making just to suit you is not going to get you very far.

Also, I am not surprised that you do not understand what I am saying, considering that you can't even figure out how lack of regulation in the financial industry got us into this mess, and that you seem unable even to guess at what might be some promising approaches to steering out of it, even though such options have been Topic A of public discussion in the media for months. Your supposed suggestions for how to go forward are, as I suggested earlier, nothing but a repeat of the past, even though you claim otherwise. I reject them.

So we've been watching this unfold for a while now. We've been watching giant companies join other giant companies and swallow up all the mom and pop stores around the country.

They did so with the promise of lower prices, better services, easier access, etc. And we ate it up. We were happy to support these industry giants until they drove all the competition away and we were stuck choosing between crappy banks that screw you at every turn because they have no competition, giant automakers they force out or buy up any competitors, superstores providing crappy goods and terrible service, bad service, bad food, ridiculous fees, etc.

And, now, for all our indifference to the violations of antitrust laws and their very intent, now these very companies are claiming to be "too big to fail".

My thought is... if you're too big to fail, you're too big, period. There's a reason why monopolies and oligopolies are bad for industry. These idiots begged us to allow them to form and are now telling us we're forced to save them because they formed them. What say you?

Those corporations who have squandered their money deserve failure. Why let them do the same thing again

We can divide the why from the how very easily -- by talking to the how person about the how and the why person about the why and taking all of their points together as a broad view on the whole issue.
I can try, but I don't think there's any need for a why person in that case.

To keep insisting that a person has to argue a point they were not making just to suit you is not going to get you very far.
I'm just trying to figure out exactly how you plan to contribute. If by the "why" all you mean is that something is wrong and hence we must fix it, then all you can realistically do is sit on the sidelines and yell "I agree" or not. If you get any more specific than that, you won't be able to avoid the details of the how. Can you see my point? If you don't want to get into a debate about the details of regulations, then that's fine, but you have to stop pretending that you can contribute anything to a debate or a cause. You'd just be stating the trivial.

Also, I am not surprised that you do not understand what I am saying, considering that you can't even figure out how lack of regulation in the financial industry got us into this mess, and that you seem unable even to guess at what might be some promising approaches to steering out of it, even though such options have been Topic A of public discussion in the media for months.
You know as well as I do that public discussion is of no value to these things. The public has no information and no education on these matters and is prone to making that mistake mixing up regulations with punishments, and the media just feeds the public what it wants to hear and can understand.

But it's kinda trivial to say "regulation could have prevented this crisis" now. I don't disagree with that, simply because "regulation" is basically an infinitely huge set of options and a right one is bound to be in there somewhere. The point is choosing that right one, with a combination of hindsight and the ability to look forward and anticipate where the next problem might be. In other words, details once again.

I'm not ideologically opposed to all regulation, I'm not an anarchist. I'm opposed (as much from a technocratic point of view as an ideological one) to bad regulation, which doesn't achieve its goals or does so inefficiently. In that I suspect all of us are alike. Our difference is just in which regulations we consider bad, and perhaps our belief in the ability of governments to actually use the right motives and the right inputs to design them. In other words, details once again.

If you want to leave it at that, then that's fine too.

Your supposed suggestions for how to go forward are, as I suggested earlier, nothing but a repeat of the past, even though you claim otherwise. I reject them.
And it's your right to do so. But traditionally people here tend to back up claims that like that with an argument or evidence of some sort. I can tell you that they are evidently not a repeat of the past, because they've never been done before.

I can try, but I don't think there's any need for a why person in that case.
I am not at all surprised that you would discount the necessity of discussing "why", considering your utter failure to address, or apparently understand, the very concept of why we should regulate the financial industry.

Fortunately, you are not the only person interested or involved with this issue, so if you would like to stop wasting my time by demanding that I defend other people's arguments, I really won't mind.

I'm just trying to figure out exactly how you plan to contribute. <snip>
In all seriousness, the only proper response to the rest of your post from this point is a resounding, "fuck you."

I don't have to "contribute" anything. I am not Tim Geithner or Barack Obama or the CEO of Citi or any of that lot. This is a debate forum where people express opinions and make arguments. I have stated my opinion and I have stated the reasons I hold it. You have failed to show any fault in my reasoning. Instead, you have attempted to deflect away from my statements by trying to make me answer for other people's arguments instead of my own. Then you have blamed me for refusing to presume to speak for Lacadaemon or Jocabia. And now you try to disqualify me from making an argument at all on the grounds that I won't defend an argument I never made, and you spin some bullshit about how I'm supposed to lay out an entire detailed program for --- what? For Obama to implement?

Yes, I see your point very clearly. It is simply this: You are an apologist for the corrupt system that has just collapsed on us. You know perfectly well that the detailed program you are demanding exists within Glass-Steagall, which you do not wish to have enforced upon you again. And you know perfectly well that my response to your repeated complaints that you don't want that kind of regulation imposed on the financial industry is that I don't give a damn if you don't want it or don't like it.

And I also don't care if you don't want to read the posts of someone who refuses to jump through hoops for you, refuses let you dictate what arguments I get to make and how, and refuses to pretend to respect your anti-regulation bullshit. You have failed to counter my statements, and you don't get to squirm away from that by pushing me out of the discussion altogether.

Neu, just ignore her. She's already demonstrated and even more or less stated that she doesn't have a clue about any of the technicalities of the economy, which is why any attempt to discuss her suggestions analytically or more specifically so as to make her rhetoric (that anyone can agree with) actually meaningful would be met with a referral to Lacadaemon (apparently trying to explicitly discuss her ideas is a 'separate argument'), because he actually knows what he's talking about. In the meantime, you'll just continue to have almost everything you said dismissed, and be pigeon holed into a 'deregulation bullshit apologist'.

NL: I have Hydesland on ignore but every now and then, when he posts right after me, I check to see if I should take him off ignore. I should not, but I will agree with him on this. Since I have stated my own opinions very clearly, and I have stated my opinions of your arguments very clearly, and I have made it as clear as I know how that I am using Lacadaemon as my source for explanations that back up my arguments, and that therefore, I will refer all such questions back to him, you would probably be better served to stop talking to me.

Thanks.

Yah, trust me follow her advice, before it gets really ugly. I've been there. :p

NL: I have Hydesland on ignore but every now and then, when he posts right after me, I check to see if I should take him off ignore. I should not, but I will agree with him on this. Since I have stated my own opinions very clearly, and I have stated my opinions of your arguments very clearly, and I have made it as clear as I know how that I am using Lacadaemon as my source for explanations that back up my arguments, and that therefore, I will refer all such questions back to him, you would probably be better served to stop talking to me.

Thanks.
Right, duly noted.

I have a feeling though that he might not agree with you as much as you think.

I'd guess what I am saying is that I am trying to find a system where interests are aligned - unlike now. I'm open to other ideas of course.
It's not really about other ideas, it's about how to actually do it. But even where investment banks become private partnerships, it hardly offers solid protection. Whether Bear Stearns is public or private doesn't impact whether or not it needed rescuing when it gets into trouble, and the list of privately owned entities and partnerships that managed to fuck themselves up is long.

Nah, tiny banks can and do exist as credit unions and S&Ls, they portfolio. Granted that's been massively diminished over the years, but that's how it used to be. I don't disagree that the cost of money goes up, and there is far less access to credit which in turn puts downward pressure on asset prices but so what? It's arguably more stable.
I think the problem is that in order to compete with larger firms they have to compensate for their higher cost of funding by making their balance sheets work that much harder. So that's always going to make them enthusiastic users of securitisation and then create these conflicts of interest between the people actually writing the mortgages and the people who end up holding the risk. If you want to introduce a rule that requires banks to actually take on some of that risk, the small ones aren't going to be able to compete, are they?

The US has had this problem before, during the Great Depression. There were all sorts of reasons, some regulatory, some historical for there existing thousands and thousands of tiny banks. None of them were strong enough to take the hits, so they started to fail by the hundreds. In European countries there were also a few failures, but I'd dare say that as a percentage of the total deposits failed (and the effects of the regional distribution of those) the effect wasn't as central to people's lives. So the question is: given the vulnerabilities of these small banks and past experiences with them, why does the US need 8,400?

Nobody cared. So when I say lack of supervision, it goes back to the insufficiently motivated staff. I'm not arguing for more regulation. Just the current rules to be enforced.
(Almost) no disagreement there.

(With the caveat that I want I-banking and commercial banking split).
But what's the ultimate point?

Assuming that a crisis like this occurs, the fact that some commercial banks are exposed to securities markets and various derivatives doesn't really change the system-wide dynamics.

So the point is to decrease the chance of such a crisis. The concern about using commercial banking operations to improve one's credit risk is valid, but didn't apply to Bear or Lehman's. It does to Citi for example, but do you really think that Citi or BofA/Merrill not existing as they do would change things? I just don't see how the division between the two industries would change the mechanics or even the probability of this sort of thing occuring to a significant extent.

The way the I-banks could take on these silly levels of leverage and expose themselves to so much risk was because the way flawed risk management techniques were integrated into oversight, both externally and internally. Having access to a commercial balance sheet would have been useful and probably encouraged taking on even more risks than would have been otherwise, but clearly stand-alone investment banks are more than capable of knocking themselves out. So that's why I'm saying the focus should be in that area, rather in defaulting to going back to splitting things apart when, in my view, there is not a whole lot of evidence to support it other than what Muravyets put forward.

Look, it was criminal insanity. Everybody knew it. But nobody cared because it was all very convenient, and nobody imagined that they would be the bagholders.
Yeah, but if all we end up doing is talk about the idiotic or criminal behaviour of individuals, then there are not a whole lot of changes to future rules required, just better enforcement. I don't think that goes far enough, I think the way capital requirements are handled need an overhaul at the very least.

Right, duly noted.

I have a feeling though that he might not agree with you as much as you think.

It does not matter. There's a reason I don't talk to him, but the only thing that matters here is that you have expressed a lack of desire to talk about what I want to talk about. Thus, you can ignore my posts from here on.

<snip for length>

Yeah, but if all we end up doing is talk about the idiotic or criminal behaviour of individuals, then there are not a whole lot of changes to future rules required, just better enforcement. I don't think that goes far enough, I think the way capital requirements are handled need an overhaul at the very least.
Having read NL's full comments, I want to point out that, to me, the disconnect in his argument is in the way he, on the one hand, says he agrees that reform is needed, but on the other hand says he thinks regulation is not the way to go. I would like to know how people like him think reform is going to be carried out without enforced regulation that includes penalties for doing things like what got us into this mess.

Do people who take his point of view assert that NO mistakes were made in how financial institutions have been run for 20 years? Do they assert that NO bad actions were done? Do they assert that there is no relationship whatsoever to the actions of banks, investment banks, etc, and the economic effects we are seeing now?

In my point of view, it is clear that the difficulties we are dealing with now is a direct result of the unregulated actions of certain large financial institutions, many of which were plain and simple corrupt. The idea that such corrupt actions would not be blocked in future by regulation is ridiculous, in my opinion. And the notion that we should not return to Glass-Steagall as the starting point for regulation going forward is likewise ridiculous, because the shutting down of Glass-Steagall was the result of deliberate political pressure from the financial industry and was the predicate for all of what we are dealing with now.

Having read NL's full comments, I want to point out that, to me, the disconnect in his argument is in the way he, on the one hand, says he agrees that reform is needed, but on the other hand says he thinks regulation is not the way to go. I would like to know how people like him think reform is going to be carried out without enforced regulation that includes penalties for doing things like what got us into this mess.

You keep saying that, and yet NL keeps pointing out that he doesn't oppose new regulation. In the very post that you quoted to make this statement he pointed out that changes to capital requirement regulation would be a good place to start - which, if I'm not mistaken, is a form of regulation - and he's absolutely right as well, given the utter failure of existing capital requirements in serving their purpose during the crisis.

How many times does NL have to say that he doesn't oppose regulation before you stop telling him that he does?

You keep saying that, and yet NL keeps pointing out that he doesn't oppose new regulation. In the very post that you quoted to make this statement he pointed out that changes to capital requirement regulation would be a good place to start - which, if I'm not mistaken, is a form of regulation - and he's absolutely right as well, given the utter failure of existing capital requirements in serving their purpose during the crisis.

How many times does NL have to say that he doesn't oppose regulation before you stop telling him that he does?
How many times do I have to state very clearly what my issues are before people stop telling me I'm saying something else? I would have thought it would be clear by now that I believe there is a disconnect in what NL, and others who argue his line of reasoning, are saying. Hence, my earlier use of the word "disconnect."

They say they don't oppose "new regulation." Yet they do not define what kind of regulation they would accept. They ask question after question about how it could be possible or beneficial to regulate the financial industry, yet they meet every answer from people like Lacadaemon -- or even professional economists, regulators, business leaders, since I don't want to just make this be about NL -- with nothing but vague objections about how they think that won't be feasible. They offer nothing concrete themselves, yet blame others for not being detailed enough, no matter what they say. Even the example from NL's posts about his support for changes in capital requirement regulations is unsupported by anything like the kind of detailed practical suggestions he demands from others.

When people like me point out that old regulations like Glass-Steagall worked fine until they were dismantled and that we could turn to them as a starting point for new regulation, we are merely talked down to about how we just don't understand. And if we persist, we are scolded, accused of making false arguments, pressured to deliver some kind of cure-program, again in that elusive "detail," and even, by some people other than NL and in other threads and contexts, insulted.

Meanwhile, all of the explanations offered upon request by NL and others like him read/sound like nothing more than the usual free market talking points about how regulation is bad for business, businesses can police themselves, there is no benefit to punishing wrongdoers, etc, etc.

I don't think I am all that unreasonable to conclude from this that such people are just free marketers in sheep's clothing, that they have no interest in entertaining any program of reform that would include regulation, and that their statements otherwise are not entirely honest. EDIT: Further, I note that he has spent more time demanding that I -- the admitted layperson -- provide detailed practical plans for how to regulate industry, and scolding and dismissing me for not doing so, than he has seriously brainstorming with someone like Lacadaemon who really could possibly come up with useable ideas. So what is his motivation really? To develop ideas? Or just to cut off discussion of wrongdoing in the issue?

If NL wants to discuss real regulation, let him do so.

Wow, did that 'Fatality!' post go to your head or what?

Wow, did that 'Fatality!' post go to your head or what?
I don't know what you are talking about. I'm just responding to what I see as unfair demands on me in re what I'm expected to add to this thread, and misunderstandings about what I am trying to say. I've made my points. I'm not going to drop out of the conversation, but I don't want this to turn into a personal argument between me and NL. He is entitled to his opinions and his ideas. I understand what he is saying and I think I understand why he is saying it. I disagree with him vehemently for the reasons I have stated. But since it's clear now that nothing either he or I will say will change the other's mind, I want to leave off direct engagement with him about the issue. But that doesn't mean I'm going to drop out of the thread. It just means I don't want to keep hashing over the same points with just one poster.

And if others want to make this another thread that just becomes all about me and what a pain I am, I'm not going to play along with that, either. But neither will I drop out to prevent it.

I've said my say, and if people keep bringing up the points I oppose, and if I can respond with something I haven't already said, or clarify something I've already said, then I will.

And if others want to make this another thread that just becomes all about me and what a pain I am, I'm not going to play along with that, either.

Clearly inaccurate. My post was half a line, easily ignored.

But as to the discussion, really, "<snip a load of crap and talking points>"? Then to begin snivelling, 'he-he-he...he was meeean to meeee.'

You call yourself the 'why' person of the discussion, but how is it you could say so much without any, as you say yourself, details. Your posts should, theoretically, boil down to 'we should regulate the system, cuz...'. And then NL could say (has said, really) something like... 'well, of course, that's easy to see, but how should we go about regulating?'. Absent details, your response would be something along the lines of 'Yes, I'm glad you agree with my reasoning, but I'm not the person to discuss details with. Perhaps <name>'

And, again, absent 'details', that's probably where the little quest ends. but you did actually advocate a bit of 'how', as I see it. The details are clear. They were in the law before Reagan. Essentially, I would like us to basically erase everything the rightwing has done in the US since 1980. For starters.
So since you had, you know, details to discuss, NL responded to them on their merits. And then you reply, spelling out (your words) more of your proposed how. Perfectly reasonable. I don't feel the need to quote the whole thing, but at the end of said post something of a question of NL's integrity comes up. NL replies, addressing both your now spelled out details, and denying that he's, paraphrasing here, 'a loon on the news too stupid to be so crazy'. Reasonable. You then use some sort of, it seems, largely imagined affront to disregard, really, all but one of the responses he made, and proceed to condemn him as 'one of those people'. Things clearly deteriorate from there, apparent to all, including the parties involved, either of whom, I suspect, could have easily bowed out properly rather than paying lip-service to the idea.

I blame the 'Fatality!' post by KoL

So, what do you think? Have I missed a key turn of phrase? Am I one of those people now? I have to practice my commentary skills. :tongue:

Clearly inaccurate. My post was half a line, easily ignored.

<snip>

So, what do you think? Have I missed a key turn of phrase? Am I one of thos people now? I have to practice my commentary skills. :tongue:
I think it seems like you are more into bitching at me for not letting a short personal snipe at me slide than you are in talking about the topic.

Too bad I am not the topic of this thread. All I wanted to do was explain why I said something. You seem to want to post a catalogue of things you think are wrong with me.

Let me know when you want to discuss the economic crisis, the concept of "too big to fail" and whether it is real/false or good/bad, and/or what to do about it. Until then I have nothing to say to you but that I am not the topic of this thread.

EDIT: Also, don't think I didn't notice that in your session of scolding me for being a failure at NSGing, you acknowledge that I expressed a "why" opinion and then blamed me for not answring NL's "how" questions, which is exactly what I told him I would not do -- and I told him why I wouldn't do it, too. And no, I'm not going to tell the same thing to you. And as for your masterful pouncing on my reference to "detail" that you suggest I should have then listed -- in my posts in their entirety, I hope I made it clear that the details I was referring to are the Glass-Steagall legislation. And no, I'm not going to copy-paste that for you, either.

Of course, none of that matters, because I am not the topic of this thread. And neither is my style of arguing. And neither is your style of bitching at me about it by cherrypicking quotes from it out of context.

EDIT: Idle wondering: There seem to be a few people on this forum who really don't like my posts or the way I speak/express myself, and for some reason, every now and then, they seem to really want to talk about that. I don't understand why they don't just put me on ignore if I'm that much of a pain. Oh, well. /idle wondering.

I think it seems like you are more into bitching at me for not letting a short personal snipe at me slide than you are in talking about the topic.

Too bad I am not the topic of this thread. All I wanted to do was explain why I said something. You seem to want to post a catalogue of things you think are wrong with me.

Let me know when you want to discuss the economic crisis, the concept of "too big to fail" and whether it is real/false or good/bad, and/or what to do about it. Until then I have nothing to say to you but that I am not the topic of this thread.

Oh, well, if you want to discuss that, you should consider talking to someone like Neu Leonstein, he has the details of my opinion on the matter. I'm more of a 'where' person. But no one wants to talk about that. :(

On a completely unrelated note, Wal-Marts amuse me greatly.

Oh, well, if you want to discuss that, you should consider talking to someone like Neu Leonstein, he has the details of my opinion on the matter. I'm more of a 'where' person. But no one wants to talk about that. :(
You're right. No one does.

On a completely unrelated note, Wal-Marts amuse me greatly.

If by "unrelated," you mean on topic, then...why do they amuse you?

Thus, you can ignore my posts from here on.
And then you proceed to keep talking about what I said. Which would be fine, if you didn't actually misrepresent it. I think your main problem isn't with what was written, but with whatever you imagine the person who wrote it to be.

They offer nothing concrete themselves, yet blame others for not being detailed enough, no matter what they say. Even the example from NL's posts about his support for changes in capital requirement regulations is unsupported by anything like the kind of detailed practical suggestions he demands from others.
Be fair.
http://forums.jolt.co.uk/showpost.php?p=14586404&postcount=64

There are two things in my suggestions paragraph that I didn't spell out as well as I might have. One is the idea about monetary policy and the behaviour of interbank markets, which is in part because I'm still in the process of working that out myself. I'm writing a thesis on it, if it all works out I can tell you a lot more by the end of the year. The second thing is the Spanish capital requirements, which you can find out about here: http://www.economist.com/specialreports/displaystory.cfm?story_id=11325484 and for a bit of extra background here: http://www.economist.com/specialreports/displaystory.cfm?story_id=11325492

When people like me point out that old regulations like Glass-Steagall worked fine until they were dismantled and that we could turn to them as a starting point for new regulation, we are merely talked down to about how we just don't understand.
That's because Glass-Steagall is a piece of regulation that was written in the Thirties meant to cover entirely different things from the stuff going on today. It's all very easy to draw parallels between 1929 and today in general terms, but when it comes to regulations, the banks will (as is their right) follow the letter rather than the spirit of the law. I've laid out why I think Glass-Steagall is the wrong platform to go with, simply because it won't do what the "why" implies a new piece of regulation should be doing.

I don't think I am all that unreasonable to conclude from this that such people are just free marketers in sheep's clothing, that they have no interest in entertaining any program of reform that would include regulation, and that their statements otherwise are not entirely honest.
And you'd be wrong to conclude that. I approach NSG as an education thing more than anything, I want to come out of every discussion with more knowledge about something than I had before. When it comes to talking about policies (which is what this ultimately is), I want to come out with a clear idea of what I want my elected representatives to do, even to the point of being able to do it myself if for some reason I was put on the spot.

Or just to cut off discussion of wrongdoing in the issue?
I thought some sort of not further defined wrongdoing was acknowledged and sort of taken as a starting point. If you want, by all means we can discuss just what sort of things were unequivocally wrong, which were honest mistakes and which were normal and acceptable practices that some people nonetheless have objections to (eg charging interest, leverage, etc). But again, we'd just end up discussing details of how the banks work. And given that ideally regulations target these things, chances are the details would be pretty much the same ones we could have talked about here.

I don't think you should be taking being asked for details as a threat or a debating tactic (I don't actually use any tactics consciously because I don't set out to "win" anything), but rather as an opportunity to flesh out your view on things more thoroughly. That's usually what I end up having to do in any discussions on philosophy - I have no idea about that stuff, so I google it and read up. I don't take the requirement in such a discussion to know the details of what everyone is saying (implicitly as well as explicitly) as a personal insult.

And then you proceed to keep talking about what I said. Which would be fine, if you didn't actually misrepresent it. I think your main problem isn't with what was written, but with whatever you imagine the person who wrote it to be.
Is it your goal to force me out of this thread, just by annoying me until I can't stand it anymore?

Be fair.
http://forums.jolt.co.uk/showpost.php?p=14586404&postcount=64

There are two things in my suggestions paragraph that I didn't spell out as well as I might have. One is the idea about monetary policy and the behaviour of interbank markets, which is in part because I'm still in the process of working that out myself. I'm writing a thesis on it, if it all works out I can tell you a lot more by the end of the year. The second thing is the Spanish capital requirements, which you can find out about here: http://www.economist.com/specialreports/displaystory.cfm?story_id=11325484 and for a bit of extra background here: http://www.economist.com/specialreports/displaystory.cfm?story_id=11325492
Blather. Nothing but chin-music about what you are thinking about, what you will do in the future, what you will tell me someday -- answers that don't exist to a question I never asked you. That post you quoted and told me to be fair about was the very post where I told you to stop trying to make me defend someone else's argument, to stop trying to make me stand in for Lacadaemon. You be fair for a fucking change, and stop blaming me for not pretending that I can make his arguments for him. I realize that pretending like you're completely on top of everything is apparently part of your standard procedure, but it is not mine.

And no, I am not going to give you credit for making solid suggestions when you have been nothing but vague and cavalierly speculative throughout. Just like I said from the start.

That's because Glass-Steagall is a piece of regulation that was written in the Thirties meant to cover entirely different things from the stuff going on today. It's all very easy to draw parallels between 1929 and today in general terms, but when it comes to regulations, the banks will (as is their right) follow the letter rather than the spirit of the law. I've laid out why I think Glass-Steagall is the wrong platform to go with, simply because it won't do what the "why" implies a new piece of regulation should be doing.
You are repeating yourself without adding anything or advancing the conversation. You already said essentially all this, and I already told you why I reject it -- because Glass-Steagall worked until it was destroyed. It did not fail to adapt to changing circumstances. It was deliberately shut down and AFTER THAT, we saw the corruption and bad judgment that led to the current crisis. You want to start building new regulation? My concrete suggestion, my "contribution" that you condescendingly claim I'm supposed to make, is that we resurrect Glass-Steagall and use it as the foundation of new regulation.

That is the third or fourth time I've said that in this thread. It is the last. Any further repetitions of this same point from you will be met with a link back to this post.

And you'd be wrong to conclude that. I approach NSG as an education thing more than anything, I want to come out of every discussion with more knowledge about something than I had before. When it comes to talking about policies (which is what this ultimately is), I want to come out with a clear idea of what I want my elected representatives to do, even to the point of being able to do it myself if for some reason I was put on the spot.
Yeah, sure, whatever. That's super-duper noble of you and all, but don't you think you'd be better served to do your policy planning by talking to real economic and business experts than arguing with some bored clock-watchers on the internet or by copping an attitude with me?

I thought some sort of not further defined wrongdoing was acknowledged and sort of taken as a starting point. If you want, by all means we can discuss just what sort of things were unequivocally wrong, which were honest mistakes and which were normal and acceptable practices that some people nonetheless have objections to (eg charging interest, leverage, etc). But again, we'd just end up discussing details of how the banks work. And given that ideally regulations target these things, chances are the details would be pretty much the same ones we could have talked about here.
More blather, but a nice example of the obfuscation I've been complaining about.

I don't think you should be taking being asked for details as a threat or a debating tactic (I don't actually use any tactics consciously because I don't set out to "win" anything), but rather as an opportunity to flesh out your view on things more thoroughly. That's usually what I end up having to do in any discussions on philosophy - I have no idea about that stuff, so I google it and read up. I don't take the requirement in such a discussion to know the details of what everyone is saying (implicitly as well as explicitly) as a personal insult.
I tried three times to draft a response to this egotistical condescending bullshit, but I couldn't manage anything that was not flaming.

Fine, I get it that you don't like being talked about. I don't care. If you would use the ignore function, you would not know if I am talking about your points and not be prompted to waste more of my time with your nonsense. I am here to discuss issues and examine arguments. As long as you are complaining at me about me not being fair enough to call your vague equivocations "detailed plans", and me refusing to conform my arguments to your demands, and me not being impressed enough with you to go google-educate myself until I come around to agreeing with you, then I cannot argue the issues. I'm too busy being bothered by you. That is why, since I want to focus on issues, I talk about the argument but do not talk to the poster who most recently presented it.

So I'm going to keep engaging with this thread as I see fit, and if you cannot bring yourself to ignore me, then I will ignore you as long as you keep saying things that are irrelevant or redundant with you've already said or just prove the points I already made.

Buh-bye.

Is it your goal to force me out of this thread, just by annoying me until I can't stand it anymore?
Hardly. But if you're going to be attacking my posts after I thought we had resolved to go our separate ways, I feel that it's perfectly legitimate to respond. If you want, I can do the same thing without quoting you, but I think that would be even more childish than this already is.

Anyways, here's where I believe our disagreements are:

1. You believe large financial firms should be broken up into smaller, independent firms, while I believe it is not about the size, but about the system-wide interconnectedness and therefore breaking up firms is not going to help unless it changes this interconnectedness.
2. You believe Glass-Steagall should be brought back, presumably with some modifications. I believe it's unnecessary to bring back the entire law when there are only specific things we want to achieve sitting within the broad framework, and when there are things we'd like to achieve but that Glass-Steagall wouldn't be concerned with at all.
3. More generally, you think the problem is deregulation. I think the problem is bad regulation, and bad regulators.

Does that sum up the state of things accurately, and do you see any value in trying to discuss any of these points? If not, well, I tried.

And no, I am not going to give you credit for making solid suggestions when you have been nothing but vague and cavalierly speculative throughout. Just like I said from the start.
Would you like the exact text of the Spanish regulation with regards to capital requirements, if the article in the Economist is not solid enough?

You are repeating yourself without adding anything or advancing the conversation.
That's because when I try, you accuse me of wanting to talk about details. Therefore the following shall be taken as addressing anyone who'd like to respond as opposed to exclusively you.

Glass-Steagall was aimed to achieve three things:
1. Establish the FDIC
2. Prevent FDIC-insured institutions from getting into the riskier securities business, so as to reduce the likelihood of their needing FDIC cash.
3. Prevent conflicts of interest between (equities) underwriting and commercial banking.

The first point is not really relevant. It wasn't overturned and other than Pissaro no one is going to blame the FDIC for the crisis.

The third point had, IMHO, nothing to do with the crisis either. If you want, I can go look for the papers I saw yesterday about the way underwriting fees reflected that apparently markets already priced in some level of conflicting interest, but it's not going to be helpful to the conversation.

The second point is the crux of the issue. The question is: did the FDIC suffer increased demand for cash because institutions it insured took risky bets on securities markets. The answer is actually "no". There have been two kinds of failures so far: pure investment banks like Bear Stearns and Lehman Brothers, and commercial banks in their dozens, like Silver Falls Bank. The former are not the responsibility of the FDIC, investment banks aren't covered by it*. The latter are, but they are failing because a) the loans they have on their books are turning to crap and the collateral value disappeared and b) they can't turn over their wholesale debt they use to run their business.

a) has nothing to do with Glass-Steagall either, whether the law exists or not is not important in that case. The only way b) matters is if the kind of dependence on securitisation and wholesale funding would not have been possible under the Act. From what I've found so far, the latter was not really regulated by the law, while the former may have been.

And thus, the entire argument comes down to this one point: if commercial banks' ability to move loans off their balance sheet had been curtailed significantly, such that even selling single loans to investment banks for further packaging would have been impossible, then Glass-Steagall would have had an impact.

Regardless of the answer to that specific question: why do you think the entire act is necessary, if only this particular issue is important? Would it not be sufficient to just add this particular piece of the law back in, thus "encouraging commercial banks to keep loans on their books" as I suggested earlier?

You already said essentially all this, and I already told you why I reject it -- because Glass-Steagall worked until it was destroyed. It did not fail to adapt to changing circumstances. It was deliberately shut down and AFTER THAT, we saw the corruption and bad judgment that led to the current crisis.
And as I said before, correlation does not imply causation. It just doesn't.

*Hence the call for increased regulation of investment banks, since it's now patently obvious that while they're not covered by the FDIC, they (or rather, their counterparties) are going to be rescued in some way nonetheless.

And if you don't think the following matters, feel free to ignore it: I'm posting it for the benefit of others who also happen to read this post.
The Two Johns worried about commercial banks, and one of Whitehead's major contributions was his successful lobbying to extend the life of Glass-Steagall, the federal law that kept the commercial banks out of the securities business for decades.

The differences in the ways the Two Johns expressed themselves went on display at the firm's annual investment banking conference when someone asked, "Why is the firm so worried about the commercial banks getting into our investment banking business?" Weinberg (http://en.wikipedia.org/wiki/John_Weinberg), direct and blunt as ever, simply said: "Because they'll screw it up!" Whitehead (http://en.wikipedia.org/wiki/John_C._Whitehead) then rose to give a typically erudite and articulate, and in this case lengthy, explanation of the significant differences in cultures, capital, people, management and strategic priorities - until he paused, looked over at Weinberg, smiled broadly, and said: "Just as John said, they'll screw it up!"

1. You believe large financial firms should be broken up into smaller, independent firms, while I believe it is not about the size, but about the system-wide interconnectedness and therefore breaking up firms is not going to help unless it changes this interconnectedness.

Right, but what it came down to was there were only five IBs trading publicly (more or less) so when one of them started to act stupidly in order to boost short term revenue - I am loathe to call them profits - there was immense pressure on the rest from shareholders to act in a likewise fashion. So the silliness became standard practice across the industry. And because there were so few entities, it spread quickly.

Now contrast that to the regional retail banks, of which there are many many more entities. 4000 or something. The greater number of entities resulted in a slower spread of silliness, so people actually blew themselves up before the problem was across 100% of the industry. Which is why, of course, there are still many banks like Hudson Valley, which are actually sound.

I tend to think that if there had been 50 or 60 I-banks, there would have been more diversity in management strategy, and the mistakes would have become obvious before the whole thing became system wide and super crisis level.


The second point is the crux of the issue. The question is: did the FDIC suffer increased demand for cash because institutions it insured took risky bets on securities markets. The answer is actually "no". There have been two kinds of failures so far: pure investment banks like Bear Stearns and Lehman Brothers, and commercial banks in their dozens, like Silver Falls Bank. The former are not the responsibility of the FDIC, investment banks aren't covered by it*. The latter are, but they are failing because a) the loans they have on their books are turning to crap and the collateral value disappeared and b) they can't turn over their wholesale debt they use to run their business.


That's not entirely true. What about the case of banks like Citi, or JPM? And Glass stegal would have prevented the BAC MER deal, which effectively finished BAC, putting the FDIC on the hook.

As I have often said, there is no one particular thing which lead to the financial meltdown, lots of factors had to be there. That said, repeal of Glass steagal did exacerbate the situation. Had Citi and JPM remained pure retail, extricating the financial system from the mess would be a deal easier as they would arguably be in more solid positions.

I haven't checked exactly what he said, but Paul Volcker kind of agrees with me.

We the consumers are partly to blame. Whether it's cause the poor go for what's cheaper or cause some ppl with money always buy cheap (tight ass rich ppl*) .. it's still on the consumer head in a big way.. for at least the reason these companies survive.

I don't like seeing mom n pop stores or small family business going out either.. but what can we do as a whole when the big dogs buy everything from overseas, get their labor over seas paying them shit and making a killing by selling over here for lowest price and most ppl want that low price?

The avg consumer doesn't care HOW or WHY it's cheap .. just long as it's cheap.

that's why Walmart is as successful as it is today. They aimed at the poor or lower class (or tight ass rich people) .. ie the most populous demographic. High end places snout their noses .. but they ain't got near the bank as Walmart.. which is win and fail at the same time.


*Worked at Goodwill a couple months.. There was more ppl there with money scavaging (I mean they acted like wolves on a kill) than poor. They were either Ebayers or tight ass rich fuckers. Greedy tight bastards. I detested them. But .. that shit came form somewhere.. people from all walks of life gave. I just hated some un deserving tight asses with money got some of the shit.

I tend to think that if there had been 50 or 60 I-banks, there would have been more diversity in management strategy, and the mistakes would have become obvious before the whole thing became system wide and super crisis level.
That's possible, but wouldn't you say that investment banking is a business in which economies of scale matter quite a bit as well? Boutique banks can do one particular kind of deal well, but they can't cross markets or do deals that depend on sheer volume or capital intensity. And that kind of thing has its purposes too, from underwriting to private wealth management.

That's not entirely true. What about the case of banks like Citi, or JPM? And Glass stegal would have prevented the BAC MER deal, which effectively finished BAC, putting the FDIC on the hook.
The impression I'm getting from here is that JPM is handling itself relatively well. Citi and BofA is a different story, but to what extent has it actually been the FDIC that's been handling this? Granted, were there to be an actual bankruptcy it might end up on the line, but realistically I would say that long before then those would be handled as investment banks by the Fed and the Treasury rather than the FDIC.

As I have often said, there is no one particular thing which lead to the financial meltdown, lots of factors had to be there. That said, repeal of Glass steagal did exacerbate the situation. Had Citi and JPM remained pure retail, extricating the financial system from the mess would be a deal easier as they would arguably be in more solid positions.
To what degree do you think that the connection Citi's nasty balance sheet happens to have with a retail operation really changes things though? Isn't it more Citi's role as counterparty that threatens the system?

I haven't checked exactly what he said, but Paul Volcker kind of agrees with me.
He does, and he opposed the repeal too back in the day. It would be interesting to see whether he has any genuinely novel reason for doing so, but as it stands, my understanding of what's going on doesn't really warrant much focus on Glass-Steagall. The fact that full service banks exist makes some things more difficult to clean up, but I don't think it contributed greatly to the crisis appearing in the first place or made it much more severe.

All that being said, I'm not a fan of the idea of a full service bank. I think it's bad strategy, and Citi's performance in particular even before the crisis is a case in point. Trying to put retail- and investment bankers together is not a good idea, and other than a big balance sheet to play with the commercial operations just don't offer anything interesting.

Right, but what it came down to was there were only five IBs trading publicly (more or less) so when one of them started to act stupidly in order to boost short term revenue - I am loathe to call them profits - there was immense pressure on the rest from shareholders to act in a likewise fashion. So the silliness became standard practice across the industry. And because there were so few entities, it spread quickly.

Now contrast that to the regional retail banks, of which there are many many more entities. 4000 or something. The greater number of entities resulted in a slower spread of silliness, so people actually blew themselves up before the problem was across 100% of the industry. Which is why, of course, there are still many banks like Hudson Valley, which are actually sound.

I tend to think that if there had been 50 or 60 I-banks, there would have been more diversity in management strategy, and the mistakes would have become obvious before the whole thing became system wide and super crisis level.



That's not entirely true. What about the case of banks like Citi, or JPM? And Glass stegal would have prevented the BAC MER deal, which effectively finished BAC, putting the FDIC on the hook.

As I have often said, there is no one particular thing which lead to the financial meltdown, lots of factors had to be there. That said, repeal of Glass steagal did exacerbate the situation. Had Citi and JPM remained pure retail, extricating the financial system from the mess would be a deal easier as they would arguably be in more solid positions.

I haven't checked exactly what he said, but Paul Volcker kind of agrees with me.
Thank you! This is precisely what I have been thinking but not finding the words to say.

One of the things that frustrates me very much in talking about this issue is when people talk as if the AIG model is the necessarily inevitable model and talk about how "everybody" was working that way, when in fact:

1) There are other very successful models working right now, such as the retail banking model. While it is not entirely applicable to all financial businesses, it nevertheless proves, because those retail banks are just as networked/interconnected as anyone else yet still "detachable" in a way that protects them in the manner you describe, that massive consolidation is not necessarily the inevitable way to go, nor necessarily the best way to go.

AND

2) Only a relatively few controlling individuals (at the upper executive and director levels) have been working this way in an industry that is huge in scope but very limited in management participation. The number of individuals who either serve on the boards of multiple corporate entities or are personally connected to individuals managing other entities further reduces the management pool.

It is no wonder then that the bad decisions were made so universally, since they were being made by such a closed club of like-minded people. It begs the question of whether the bad management was a result of market pressures, or actually originated in the bad thinking of those individuals.

I agree completely that a broader and less incestuous management pool, as well as more real competition and the protections of mandatory separations of higher risk business areas, would tend to reduce this kind of rapid domino effect, both among institutions and within them.

By the way, just last night, in an interview with Rachel Maddow on MSNBC, Elizabeth Warren, TARP Congressional oversight panel chair, agreed with the current head of the FDIC that it is time to start preventing banks/financial institutions from getting as big as AIG, essentially repeating the point I entered this thread with, that "too big to fail" should be a condition that mandates forcible breaking up of the corporation.