“A dynamic economy will always have booms and busts. But the story of the past twenty-five years is that Washington has created a financial system that cannot withstand the destructive part of creative destruction – necessary for free markets- without
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“Washington may also be tempted to go on as before for the same reason it did in the wake of its Continental Illinois and Long-Term Capital management bailouts. Back then government regulators and financial executives came to believe: if we
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“Creating a systemic risk regulator would be a continuation of that regulatory confusion. Just as bad, a systemic risk regulator would work against Washington’s credibility in ending too-big-to-fail. Investors would be lulled into false confidence that the government is looking
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“The first step to restoring the robust financial markets that can support global capitalism is to reassert the market’s ability to discipline itself without endangering the economy. Through its too-big-to-fail policy, expanded over the quarter of a century after Continental
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“In truth, markets had been trying to work since 1984, with Continental Illinois, desperately sending signals that the modern financial system was shot through with untenable risks that required a renewal of long-held regulatory principles. But government bailouts thwarted real
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(this was published previously in the Macon Telegraph) Being in the middle of a record economic crisis presents a rare learning opportunity. Several books are worthwhile for those seeking to understand what just happened. Too Big to Fail by Andrew
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“Could free markets have sorted out the mess without extraordinary government action? Yes, but only by destroying the remains of the financial system and possibly putting tens of millions of people out of work. Despite virulent public opposition to the
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“Despite elite concerns of a public backlash against capitalism, it has been the public, not Wall Street or Washington, that has supported capitalism all along. Financiers were disconcertingly quick to run straight into the governments arms, while the public has
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