The cover story on the May 16th edition of the The Economist reads "Three Trillion Dollars Later..." Traditionally considered a pro free-market/laissez faire magazine, it discusses remedies for our flawed global banking systems. Among the solutions, it proposes better rules and more capital. It's an insightful read. It's my pick for the read of the day.
The article starts out "Could there be a better time to be a bank?" and proceeds to strip down our current banking system to its bare bones. Tax-payers around the world have poured $3 trillion to keep the banking system afloat and the banks and bankers get to keep on doing the same sort of risky business they have always done to get us into this mess! The author duly notes ... "It should be obvious by now that in banking and finance the twin evils or excessive risk and excessive reward can poison capitalism and ravage the economy".
According to The Economist the only way to really clean up the system is to fundamentally change the system. Governments should purge banks that are big enough to hold the system to ransom. Or guarantee the parts that are essential to the economy rather than all the risky bits which is the current practice. But that would take forever and be nearly impossible to determine what is essential and what isn't.
Instead the article recommends some really interesting guidelines that regulators should be applying around the world. I encourage you to read the full article...
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