» Posted by Martin Weil on March 25, 2009

"No private enterprise should be allowed to think of itself as "too big to fail." Federal deposit insurance, protecting a bank's depositors, should not become a subsidy protecting the risks taken by non-banking affiliates. If a huge "group" runs into trouble, it should take the bank down with it; no taxpayer bailouts should allow executives or stockholders to relax.

Let's not be in such a big rush to knock down barriers. The Government's biggest financial mistake of the past generation was to raise deposit insurance to $100,000 while allowing housing S.& L.'s to plunge into commercial lending. That all but removed the element of risk from foolish or corrupt loans and helped bring on the S.& L. debacle.

Beware the slippery slope to crony capitalism...."

That's Safire in a 1998 NYT Op-Ed arguing against the proposed merger of Citibank and Travelers Insurance. His thesis - knocking down the walls between "safe" government-guaranteed banking and risk capital is a really bad idea. A lesson we are now having to relearn.

Thanks to The Big Picture for the pointer,.

» Posted by Martin Weil on March 24, 2009

My dad said a fool with a plan can beat a genius with no plan.

Paul Kedrovsky commenting on the Geithner bank bailout plan, here quoting T. Boone Pickens

» Posted by Martin Weil on March 07, 2009

Are We Rome? by historian Cullen Murphy examines the founding of the USA as the "New Rome" and traces our ascent as a world power and possible current decline from that position, paralelling at times closely, at times not, the rise and fall of the Roman Republic. It is a great read of history and my favorite book hands-down of 2008.

Animal Spirits by UC Berkeley economist George Akerlof and Yale economist Robert Shiller is no less than an attempt to wholly reformulate our understanding of economics through the lens of behavioral economics. More than a little cumbersome in its writing (as with prior Shiller books), it offers so far (I am on Chapter Three) fascinating and even groundbreaking insights into the likely role of consumer confidence and fear in the rise and fall of economic cycles. Written in the heat of the current economic crisis, the book promises to address remedies for how to get us out of this mess. Shiller is one of our best contemporary economists (as is Akerlof) and strikes a very reasoned balance between the competing pulls of the Chicago Classical and neo-liberal Keynesian schools of economic thought.