1. Why Scottish independence might never happen: the bailout for the Royal Bank of Scotland
2. Why Canada has largely avoided a financial crisis
3. The scariest hour on Wall Street
Assorted links
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Viz #3 – doesn’t this suggest that American markets stay open 24 hours per day, 365 per year?
The Canadian article points out that we still haven’t addressed the underlying cause of the current crisis – an obsession with home ownership. As long as mortgage interest remains tax deductible, there’s potential for a problem.
Again, real solutions, whether in health care or finances, will require people to reduce their standard of living.
I thought the “underlying causes” were:
– greedy fat cats on Wall Street
– predatory lenders
– the existence of the Fed and fiat money
– not being on the gold standard
– lack of regulation
– too much regulation
– lots of other stuff I’ve forgotten
Tyler,
The article about Canadian banks gives the impression that regulation gets the credit for relative soundness of the banking system. The thing is though as you read the article, you see that the stability comes more from a lack of artificial incentive to buy homes.
I found the line about mortgage insurance when you have less than 20% down a bit bizarre since we do that too.
How sensitive is that Canadian economy to the price of petroleum?
Bill Stepp: I would say that Canadian banks are better regulated not less regulated.
Vincent Clement:
There is no such thing as good regulation.
What the banking system needs is a rule of law and to ditch the regulators and above all the central bankers.
Canada’s banking system has always been less regulated than America’s.
See also Charles W. Caolomiris’s article in the WSJ Saturday, “Most Pundits Are Wrong About the Bubble.” He points to the “politicization of prudential regulation by the Basel Committee, which was itself the direct consequences of pursuing ‘international coordination’ among countries, which produced rules that work politically but not economically.”
What the banking system needs is free banking and the rule of law, not central banking and political regulation.
And, yes, regulation always get politicized and gamed up by politicians and regulatees. Why shouldn’t it?
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