Someone quickly legislate this guy into oblivion
This is the kind of thing that makes me mad. The head of JPM goes on and says "we will not lend the money the govt has given us".
THEN WHY THE FUCK DO WE GIVE IT TO YOU IN THE FIRST PLACE YOU STUPID M@THERFXCKER?
In his defense he is protecting the interests of his shareholders and this is another reason I am slowly gravitating towards the opinion that
BANKS CANNOT BE PUBLICLY OWNED ENTITIES.
And in my own paranoid opinion, one of the big reasons we are in this mess in the first place.
Comments
in an effort to get to first principles or whatever that may mean, explain something to me:
how does credit become such a big deal, anyway? here are the scenarios under which i think we need bank lending, but maybe as a former CEO, you could explain the real nature of the need for liquidity to business:
- governments need to borrow in accordance with planned tax receipts, so they can conduct operations before receiving said receipts...
- businesses need to operate in the "commercial paper" market for about the same reason, that they have a reasonable expectation of income, but they need to spend before all said income comes in...
- small businesses grow on the expectations that they have capital to invest in equipment that will yield higher returns than original investment costs...
- everything else seems to me to be arbitrage, in that it is all high-risk, like borrowing to pay for current debts, in other words businesses are constantly rolling over old debt on to new debt...
i guess what i am getting at is:
outside of covering your a*s from previous debts, why does the global economy need such extended levels of liquidity that we have experienced up until this crisis?
you know what i am saying?...
yes I think that all the reasons you mention are valid economic cases where debt is good. Debt is needed for the economy to grow and without debt, we are now finding that the economy does sputter a bunch. There are stories of cargoes being delayed because they cannot get the debt. So debt for economic creation is a good thing. We also know that too much debt, will create too much bad debt and that can choke capital. Too much bad debt will pose many problems, see right now. So, at a high level it seems we want to use just enough to debt to maximize economic creation but not so much that it can wipe out capital.
After the 30's, the ratio of capital to debt was set at 10-12.
However the investment banks, backed by a lenient FED started printing debt like there was no tomorrow. Repackaging sub-prime mortgages as AAA securities and getting the cash back so they could recycle quickly.
The 'milieu' has proven completely incapable of self-regulation and did press the paddle one too many times. Essentially the system would feed the goose until the goose died.
The goose died.
So we now know that debt levels like the ones I show in the other posts are LETHAL to any well formed economy. So it's not 10, it's not 50, it's probably 30?
Then a second class of banks that can do whatever they want (obviously with a bit of regulation maybe). This would quickly drive all risk-averse people to the first class of banks. A bit like the former investment banks.
We need a new financial order...
One will emerge, by definition of the markets. Any guesses as to what that can be are interesting.
Pools of money everywhere.