Stiglitz and the "too big too fail" excuse

Warning: post en anglais.

Stiglitz is saying that people have confused "Too big to fail" with "Too big to be financially restructured". It is indeed the biggest fallacy of this crisis: pretexting systemic risk to let banksters off the hook and channel to them insane amounts of taxpayers' money with absolutely no oversight.

Note + extensive digression: While we're at it, let's not forget the big lesson of this crisis: "Too big to fail is too big to exist". This idea has been around for a long time but I last read it in an article from Simon Johnson. Simon Johnson who has now a blog on the Wapo website which should put a cap on his critical outbursts (my bet would be that the word "oligarch" will make few appearances in his wapo blog). A little bit like Nouriel Roubini's political ambitions seem to me to be limiting his opposition to the Geithner clique. Nothing like carrots to tame criticism. Yet the fact that these individuals are now prominent commentators indicate that the world has changed. Is one more likely to change things by working with the system or by sticking to a hardline? Opposition is a political strategy to gain power. In the short run, it can look like a sellout but what if it brings real change in the medium run?

Proposition pour les CDS

Un système pour réformer le trading de CDS est décrit ici (site de Roubini). Il s'agit de faire passer tous les trade par une contrepartie unique qui a du coup les données nécessaires pour évaluer si le marché est globalement assez capitalisé.

Friday Plane Blogging

On Saturday again...