“Let badly managed banks go bust, let people who are better at running banks and that better understand risk take over.”
I would also say take a close look at the monetary system, and the monetary policy!
Too bad my camera is out of battery.
“Gresham’s law: “Bad money drives out good if their exchange rate is set by law.” Do this “law” also apply to banks: Bad banks drives out good ?”
Conservative banks that keep plenty of reserves are not able to expand that much in the credit boom and are loosing market shares to banks with no risk aversion.
The risky banks are more likely to expand enough to get too big to fail, and are therefore also more likely to get bail out money…
Well the Gresham law can also go in reverse, but that is typically first when things get really ugly.
From The Collector’s Blog.
- Leadership urgently required: Sustainable value or race to the bottom? (fitforrandomness.wordpress.com)
- Gold-Backed Money (lewrockwell.com)
- Clegg warns against banks that are too big to fail (libdemvoice.org)
- A Day Without a Fed (reason.com)
- Fed’s Bernanke:Community Bnks Face’Still-Difficult’Econ Condns (forexlive.com)