Comments on: One Bank CEO Has The Courage to Stand Up to the Bailout Bonanza http://gop3.com/2008/11/17/one-bank-ceo-has-the-courage-to-stand-up-to-the-bailout-bonanza/ Fighting Like Warriors and Thinking Right. Thu, 04 Feb 2010 20:53:39 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Super Id http://gop3.com/2008/11/17/one-bank-ceo-has-the-courage-to-stand-up-to-the-bailout-bonanza/comment-page-1/#comment-346028 Super Id Thu, 20 Nov 2008 23:54:33 +0000 http://gop3.com/?p=2581#comment-346028 The problem is that the banking system is too inter-related with credit derivative exposure (thanks to JP Morgan's invention). This is not even a new issue, Warren Buffet previously called these derviatves financial weapons of mass destruction, they bankrupted Orange County, and nearly took down the world's financial industry in 1999 with the failure of LTCM. As much as I am in favor of the free market, a bail out is needed. We have the financial equivalent of having one power grid for the entire country--if any portion loses power the power goes out across the entire country. But with banking its worse, the entire world is connected. In short, regulation is needed to prevent the interconnections. Just as a battleship can seal off a portion of the ship in the event of a leak the financial system needs to be able to allow a bank to fail without knocking the remaining banks down as a result. Buckle up, we're in for a bumpy ride. The problem is that the banking system is too inter-related with credit derivative exposure (thanks to JP Morgan’s invention). This is not even a new issue, Warren Buffet previously called these derviatves financial weapons of mass destruction, they bankrupted Orange County, and nearly took down the world’s financial industry in 1999 with the failure of LTCM.

As much as I am in favor of the free market, a bail out is needed. We have the financial equivalent of having one power grid for the entire country–if any portion loses power the power goes out across the entire country. But with banking its worse, the entire world is connected.

In short, regulation is needed to prevent the interconnections. Just as a battleship can seal off a portion of the ship in the event of a leak the financial system needs to be able to allow a bank to fail without knocking the remaining banks down as a result.

Buckle up, we’re in for a bumpy ride.

]]> By: richard martin http://gop3.com/2008/11/17/one-bank-ceo-has-the-courage-to-stand-up-to-the-bailout-bonanza/comment-page-1/#comment-343130 richard martin Tue, 18 Nov 2008 02:21:08 +0000 http://gop3.com/?p=2581#comment-343130 I agree, but the situation is so complicated that it is no longer certain that putting a stop to the bailouts will help. I personally think it is too late to save the financial sector or the auto industry. But, who wants to make that call and suffer the consequences? I agree, but the situation is so complicated that it is no longer certain that putting a stop to the bailouts will help. I personally think it is too late to save the financial sector or the auto industry. But, who wants to make that call and suffer the consequences?

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