Nicole Gelinas and the Real Black Swan
May 1984. Continental Illinois. The government decided it could not fail. The Reagan Administration took an unprecedented step. ...
Our member Louie Mungaray called my attention to this wonderful presentation by Nicole Gelinas on C-SPAN. She's introduced by Amity Shlaes. Nicole's book After the Fall, as I mentioned yesterday, is our next Book Club selection, and Nicole will be joining us, beginning next Friday, to discuss it.
If you want more of something, subsidize it ... If you want a financial crisis ... subsidize financial companies borrowing for the purpose of reckless speculation. ... The real Black Swan would be if we hadn't had a financial crisis.
Her argument is extremely compelling to me. It's common sense, backed up by a detailed command of this history. I can't see any way she's wrong. Neither can anyone else, from what I can see. Has anyone made a serious case against what she's saying? Not that I've found.
Some questions have no good or satisfying answer: Why is there suffering in the world? Why is there something rather than nothing? But some questions have a pretty good answer. Why did we experience such a spectacular financial meltdown? That is not an utter mystery. She is certainly providing at least part of the answer to the question, if not most of it. Very specific policy recommendations follow from what she's saying.
So why aren't more people demanding they be implemented?
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Sep '10
Re: Nicole Gelinas and the Real Black Swan
So why aren't more people demanding they be implemented?
Because structural reforms can not be implemented except by a populace with the will and virtue to make it happen. Though the latest podcast gives some hope, the populace at large has to begin to identify government intervention as not only not beneficial, but harmful.
I don't see that happening for awhile yet. Until California goes bankrupt, that is.
Jul '10
Re: Nicole Gelinas and the Real Black Swan
The federal government, right now, today, with 20% of the work force in serious distress, is pursuing no end of policies to assure that the crisis worsens and deepens:
And while the President dances and vacations, his press allies waste hours and inches on alleged Tea Party racism to distract from the federally driven collapse.
May '10
Re: Nicole Gelinas and the Real Black Swan
Claire Berlinski, Ed.: Very specific policy recommendations follow from what she's saying.
So why aren't more people demanding they be implemented? ·
Same reason "broadening the tax base" is like pulling teeth: lower-income Americans enjoy special treatment from the government, and many upper-income Americans enjoy knowing the lower-income folks are receiving it.
Paul Ryan may be the last, best hope for fiscal sanity in Washington, and he'll be demonized to no end when (if?) his recommended policy changes gain momentum.
Oct '10
Re: Nicole Gelinas and the Real Black Swan
If you read the text of the Resolution Authority in the financial regulation bill, it really is quite good. It's bankruptcy law for too-big-to-fail institutions.
Companies "rescued" by the government must be liquidated. If you were so stupid you got bailed out you must die, dismembered and sold off by the government. Other then that it's basically the same as the FDIC quasibankruptcy process.
Companies no longer have assurance their shareholders and creditors are all safe. So long as regulators take a sufficiently hard line, this should remove the too-big-to-fail interest advantage large companies get, and aforesaid companies should get smaller (after a certain point, there aren't any economies of scale in finance).