Stability of Financial System - Minsky Seminar
Joe Leote
Minsky Perspectives and Proposals to Improve Stability in the Financial System, Session 5
https://www.youtube.com/watch?v=_jQsajnbn44
Tom Paine II
helge nome
It's like trying to fix an airplane that by design is inherently unstable.
The system needs to be re-designed.
This is prevented by vested interest groups who profit from the instability.
So we are really dealing with a political problem, rather than an economic one.
Until people say that enough is enough, the status quo will prevail.
Helge
Sent: April 6, 2017 2:51:23 AM
To: understan...@googlegroups.com
Subject: Re: Stability of Financial System - Minsky Seminar
Tom Paine II
helge nome
This one certainly is.
That does not mean that there are no alternatives.
The bullies benefit from chaos.
Helge
lante...@gmail.com
Signature: Salutations and fine regards.
helge nome
Intellectuals are an integral part of the mix which brings change.
A change of heart precedes change in the real world.
Legal slavery being a case in point.
Helge
Sent: April 7, 2017 2:40:34 AM
Jean Erick
----- Original Message -----From: helge nomeSent: Thursday, April 06, 2017 8:08 AM
lante...@gmail.com
Signature: Salutations and fine regards.
helge nome
Once people understand the nature of the present financial system they will understand how they are being taken to the cleaners.
That will hopefully bring about a change of heart so that they will no longer accept the status quo.
Study the history of the dirty thirties and the picture gets clearer.
Helge
Jean Erick
lante...@gmail.com
Signature: Salutations and fine regards.
helge nome
It can be argued that the combination of investment banking activities and commercial banking tends to increase the instability of the financial system, making it even more prone to financial bubbles.
Helge
Investment banking and commercial banking
are two divisions of the banking industry that provide substantially different services. Investment banks expedite
the purchase and sales of bonds, stocks and other investments and aid companies in making initial
public offerings (IPOs). Commercial banks act as managers for deposit accounts for businesses and individuals, although they are primarily focused on business accounts, and they make public loans through deposit money that they hold.
Since the major economic downturn beginning in 2008, a number of entities that mix investment banking and commercial banking have fallen under intense scrutiny, being looked at as the source of the downward trend. There is a great debate over whether the two
divisions of the banking sector should operate under one roof, or if the two are best kept separate.
Federal Regulation
Commercial banks are highly regulated by a variety of federal authorities, such as the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). Commercial banks are insured by the federal government, maintaining an ability to protect customer accounts and provide a certain level of security. Investment banks differ, as they are much more loosely regulated by the Securities and Exchange Commission (SEC). This offers less protection to customers, but allows investment banks a significantly greater amount of operational freedom.
The comparative weakness of regulation by the government, along with their specific business model, does give investment banks a higher tolerance of, and exposure to, risk. Commercial banks, on the other hand, have a much lower risk threshold. Commercial banks have an implicit duty to act in ways that keeps their clients' best interests in mind. The greater level of government control on commercial banks also decreases their levels of risk tolerance.
The Glass-Steagall Act
Historically, institutions that combine commercial and investment banking have been seen in a negative light. Some analysts have linked such entities to the economic depression occurring in the early part of the 20th century. In 1933, the Glass-Steagall Act was passed and authorized a complete and total separation of all investment and commercial banking activities.
However, Glass-Steagall was largely repealed in the 1990s. Since that time, banks have been able to engage in both types of banking under the same roof. Despite the legal freedom to expand operations, most of the largest U.S. banking institutions have chosen to remain operating as either a commercial or an investment bank, just as they were before the repeal of Glass-Steagall.
Benefits for Combination Banks
There are some benefits to the combination of the functions of investment banks and commercial banks. For example, a combination bank can use investment capabilities to aid a company in the sale of an IPO, and then use its commercial division to offer a generous line of credit to the new business, enabling the business to finance rapid growth and consequent increases its stock price. The combination bank can then additionally glean the benefits of increased trading in the form of commission revenue.
Read more: What's the difference between investment banks and commercial banks? | Investopedia http://www.investopedia.com/ask/answers/061615/whats-difference-between-investment-banks-and-commercial-banks.asp#ixzz4dikZFzyP
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helge nome
I think debt forgiveness was rather selective back in ancient times.
A way to reward friends and punish foes, no doubt.
Helge
Sent: April 8, 2017 10:04:02 AM
Jean Erick
----- Original Message -----From: lante...@gmail.comSent: Friday, April 07, 2017 11:04 PMSubject: Re: Stability of Financial System"The mix that brings change". Interesting notion. Let me expand on that a little - The mix that might bring change of our financial system is: 1. Intellectuals 2. Politicians,3. Academics, and the one I like, 4. The computer geeks ( with their algorithms and coding technology)."Change of heart precedes change" - I don't understand this.
Signature: Salutations and fine regards.
Intellectuals are an integral part of the mix which brings change.
A change of heart precedes change in the real world.
Legal slavery being a case in point.
Helge
From: understan...@googlegroups.com <understan...@googlegroups.com> on behalf of lante...@gmail.com <lante...@gmail.com>
Sent: April 7, 2017 2:40:34 AM
To: understan...@googlegroups.com
Subject: Re: Stability of Financial System
Joe writes: 'Until people say enough is enough....' - True, but whenever the people, the populace, take action it is usually harsh and severe The French Revolution for example. It is better to have the intellectuals come up with some solutions. "Intellectuals" such as people who frequent this site :)
Jean Erick
----- Original Message -----From: lante...@gmail.com
Joe writes: 'Until people say enough is enough....' - True, but whenever the people, the populace, take action it is usually harsh and severe The French Revolution for example. It is better to have the intellectuals come up with some solutions. "Intellectuals" such as people who frequent this site :)
Jean Erick
----- Original Message -----From: helge nome
Tom Paine II
helge nome
"except that indentiture had a time limit"
Indeed: For the term of ones' natural life.
Helge