Mark Calabria of the Cato Insitute on the JPMorgan loss. He's a wonk's wonk, but all he needs to do here is go over basic principles:
1.) All of life involves risk
2.) Personal responsibility is the other side of the freedom coin.
3.) JPMorgan's loss was a tiny fraction of its assets.
4.) The bank's stock has taken a hit, people were fired, and Dimon, the CEO, has been up to his eyeballs in fielding tough questions since it happened. In other words, market discipline worked.
5.) Government interviention distorts the process of market discipline.
We have quite likely not heard or seen the last of the fall out from risky trading in derivatives which was not allowed before rules changes during the Clinton admin. Reform is badly needed because these things are gonna severely impact the global economy again. Stay tuned freedom lovers...
ReplyDeleteMemo to everybody, but in particular those in the banking industry: proceed with your activities with a sense of stewardship and moral restraint, so you don't invite bad karma, such as losing business or even bankruptcy. If you really want to prosper long-term, be a good person.
ReplyDeleteIt's simple: if your deposits are going to be federally insured which has prevented mass fear and irrational rationality amongst the depositors since the reforms were made following the Great Depression and the failure of which will of course result in even more taxpayer bail-outs,, well, you ain't allowed to play hustler with the money. It happened in 08 and it's gonna happen again. Too many instutitions are hedged and are losing their bets. This is just the tip of the iceburg. It's gonna be like the gilded age when there were boom/busts vs. sustained growth, every decade. Regulation stopped that too.
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