Geithner to Outline Major Overhaul of Finance Rules - Officials said the plan, which will be unveiled Thursday, will subject hedge funds and traders of exotic financial products to governmental supervision.
About time, so will critics of these unregulated exotic financial products now rule the airwaves?
And M. Shihid Alam asks 'what about the victims of financial markets?'.
But, one ought to note, even Nouriel Roubini (Dr. Doom) has good things to say about the Geithner overhaul. From Roubini's e-mail:
Nouriel Roubini (March 25): Finally, Geithner and Bernanke (see respective testimonies at AIG hearing on March 24) have come to agree about the need for a new insolvency regime for systemically important financial institutions (bank holding companies and non-bank financial institutions) in order to avoid another Lehman and expensive ad-hoc bailouts like AIG
Necessary features: A new conservatorship/receivership regime of insolvency could be similar to the one used to manage the orderly takeover of Fannie and Freddie. As soon as the stress test is done some large and systemically important banks (and their holding companies and non-bank financial arms) will have to be taken over. To do it orderly we absolutely need a special insolvency regime like the one we have for the bank arms of bank holding companies and similar to the one we have for Fannie and Freddie
On the other hand Paul Craig Roberts sees financial deregulation and offshoring (shipping American jobs overseas) as having done such tremendous damage to the U.S. economy that Obama's interventions and spending may be insufficent to bring us out of this recession, with one catastrophic result being the "depreciation of the US dollar and loss of its reserve currency role":
The enormous trade deficit that has been created by the pursuit of short-term corporate profits can only be closed in two ways. One is to stop the offshoring and to bring home the offshored production. Possibly, this could be done by replacing the corporate income tax with a tax based on whether value added to a company’s output occurs domestically or abroad.
The other way the trade deficit can be closed is by the inability of Americans to pay for imports. If debt monetization wrecks the dollar and drives up import prices, Americans will have to learn to live with less imported energy and manufactured goods. American annual consumption would shrink by the amount of the trade deficit.
No comments:
Post a Comment