So, on one hand, according to [Fred] Mishkin, we have Too Big to Fail banks, which are “now a larger problem than before,” that need to be regulated. On the other hand, also according to Mishkin, the banks will resist regulation by hiring a lot of lawyers “to get around these regulations and undermine them.”
Why not then follow the logic to its real conclusion? We need to nationalize the banks.
Bill Mitchell's conclusion, too. Bank nationalization is a sine qua non of ending economic liberalism.
But even that will be subverted without getting the money out of politics, shutting down the lobbying industry, and locking the revolving door.
Economist of the day
David F. Ruccio | Professor of Economics ,University of Notre Dame
8 comments:
"We need to nationalize the banks."
Before I could realize, I was already thinking "Oh no, god no!"
I don't know how public banks work in your country, but in mine, their services are so bad that's actually funny. Not that private banks are good. No, they always reach the top of the consumer's complaint list, together with mobile operator companies. But if private banks service is bad, public banks services is unbelievable terrible. It’s offensive.
Of course, in theory, the solution is fixing public bank’s administration, and it doesn’t even seem that hard. But, in practice, there is some powerful invisible force that makes it unable for public administrators to do an adequate job. The best way to give a step back in terms of consumer services is to nationalize a bank.
Although I agree with most opinions in this blog and with things that Bill Mitchell writes, for me it’s very easy to understand why people in general are so easily fooled by neoliberalism ideology (also known as “orthodox economics”): you just have to look at the level of quality that most public institutions deliver to citizens and consumers. That kind of bad services creates such a revolt in the general public that they don’t even criticize the theory that a good government is a small one (or an inexistent one).
http://www.3spoken.co.uk/2013/05/making-banks-work.html?m=1
These reforms allow a competitive market. Any thoughts?
André, are you aware that a significant portion of bank profits since lending was tightened after the GFC and demand for loans fell off even with rock bottom rates has been from increased fees, specifically late payment fees and then jacking up the interest rate on the account to over 20%? Is that good service?
I don't think that banking itself is the problem. It is the huge transnational, national and regional banks that are not actually banks in the traditional sense but conglomerates. The small banks and credit unions are fine, but they are disadvantaged by the way the system is structured in favor of the large banks, many of which are really criminal operations right from the top, as Bill Black and others have documented.
But we need to keep a stockpile of sociopaths to protect us from THEIR sociopaths.
Look at the whole country of Venezuela.... remove the $60+ of monopoly rent from their oil and the country cant even function... makes neoliberalism look a lot better...
I don't know the figures, but I am willing to bet that the majority of people (poor) are doing much better, while the minority that benefit from neoliberalism (rents) are doing poorly.
Same in Ecuador, Uruguay, Bolivia, and Brazil, I would expect.
When neoliberal policies are not followed, then the country is not going to look like a neoliberal one and the people benefitting from neoliberalism will either leave or fight it with the help of other neoliberal countries, that is, the developed countries that have a neo-imperial and neocolonial interest in neoliberalism.
This is a fight over whether globalization is going to be unipolar and neoliberal or multipolar and diverse. Looking at that economics alone is insufficient. This is chiefly a social and political affair that the neoliberal developed countries are attempting to settle through hybrid warfare, including economic warfare. This includes not only poor countries of the global South but also Russia, China, and India. The stakes are huge.
Those countries are banana republics. It's not the solution and it won't be adopted by developed nations citizens.
There must be other ways than neoliberal feudalism and banana republic socialism. If there isn't we are doomed.
But it's significant that some of the "banana republics" are throwing off the imperial yoke and rejecting vassalage, which had been imposed on them by force if needed in the past.
The really being news though is that there is new coalition rising to replace the Communist coalition that pretty much collapsed with the fall of the USSR and the liberalization of China.
Now BRICS is a force to reckoned with and BRICS is supporting the cause of the smaller nations trying to break free of neoliberalism, neo-imperialism, and neocolonialism.
This process is moving more slowly that if Russia and China could devote their technical force primarily to civilian technology, but the military pressure exerted by the US is forcing them to dedicate their best technological resources to the renewed arms race.
This has all the earmarks of getting ugly, especially as chaos increases in the world, which will be increasingly magnified by climate change.
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