We can wish that Banks , Shadow Banks and Bankers were self regulating, but the facts speak for themselves, Bankers break the law regularly and request that the laws be changed . Watering down laws has been the norm; ask Volcker and Greenspan.
The only way to correct this behavior is by enforcement and regulation or by imposing restrictions on these systems that create controls imposed by the market .
Since we’ve waited over 7 yrs for reforms and regulation, it might be pragmatic to require Capital minimums exceeding 25% to curtail risky behavior on the part of Banks and Bankers. The actual capital set asides to be worked out by the appropriate agency .
Far more troubling to everyone are the trades in derivatives. The Weapons of Mass destruction that caused Fiscal Collapse in 2008. It is prudent to demand a tax on these risky entities. My tax on risk is prudent and has a windfall benefit to the Country The consequences to the traders are minimal while the public gets to share in $660 Billion+ , Americans would be sharing in the profits made by the Shadow Bankers trading in these ventures.
According to Warren Buffett , Insurance would have made these trades unnecessary . They are gambling when they could be insurance purchases to protect firms and countries from ” disaster”. It is important to note, that as the World becomes more chaotic, Warren Buffett, is unwinding Berkshire Hathaway’s Re-insurance business . This fact should be a cautionary tale.
By all means pursue regulation, reform and enforcement. However, if that doesn’t seem feasible in this current environment , be creative and put Market forces to work. We can’t afford to do nothing. Nothing is unacceptable in the face of TBTF and derivative risk. All candidates for government at every level should be addressing these issues.
The added money to our society will go a long way toward rebalancing equality while acknowledging that changing ideologies takes time. When we create balance in our lives on an economic level, we will surely start to lessen tensions and stress on the the individual level. It’s a beginning toward a more equal society. Why wait for Society to ” boil over” like they do in so many societies where despair reigns unchecked. Demand these changes now and together we can all move forward.
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