5 ms·

The authors compiled data for 1886 interventions in 20 categories across 138 countries going back to the 13th century. Fabulous work. Looking forward to reading

by cs702 5y ago

The authors compiled data for 1886 interventions in 20 categories across 138 countries going back to the 13th century. Fabulous work. Looking forward to reading it. In the meantime, please do yourself a favor and take a look at Figure 6 on page 31, which shows that the number of interventions to rescue financial institutions around the world has been increasing consistently since the 1600's. As the authors put it in their abstract, "intervention frequencies and sizes suggest that the crisis problem in the financial sector has indeed reached an apex during the post-Bretton Woods era – but that such trends are part of a more deeply entrenched development that saw global intervention frequencies and sizes gradually rise since at least the late 17th century." And it's not only the frequencies and sizes of interventions that have increased, but also their scope. From the abstract: "The data shows a gradual shift over the past centuries from the traditional interventions of a lender-of-last-resort, suspensions of convertibility, and bank holidays, towards a much more prominent role for capital injections and sweeping guarantees of bank liabilities." In short, over the course of at least five centuries, the financial system has grown more and more dependent on governmental support.

dannyw 5y ago
My interpretation is that society has been increasingly dependent on the financial system. Who keeps cash anymore? It's almost illegal on many jurisdictions. It's no longer something you can opt out of, especially since the covid pandemic.
- soperj 5y ago
  It wouldn't be such a long build up if that were the case.
- bserge 5y ago
  So fucking nationalize them when they fail. Resell them after instating jail time for all the chief executive gamblers. Would it really be worse than bailing them out with public money?
waihtis 5y ago
> In short, over the course of at least five centuries, the financial system has grown more and more dependent on governmental support. More like: over the course of the last five centuries, financiers have grown more and more adept in outsourcing their losses to the government.
- tehjoker 5y ago
  True, but you also have to ask if they can actually function without government support in the current environment. The masters of the universe are the walking dead.
  - cudgy 5y ago
    Why do they need to function if they are inherently dysfunctional? Poor decisions should not be rewarded with top heavy bailouts.
- worrycue 5y ago
  > outsourcing their losses to the government. Didn’t the US government actually make a $109 billion profit from TARP when it was all said and done? https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/
  - waihtis 5y ago
    Interesting site, thanks for it. I wonder if something similar exists for the EU bailouts.
elliekelly 5y ago
> In the meantime, please do yourself a favor and take a look at Figure 6 on page 31, which shows that the number of interventions to rescue financial institutions around the world has been increasing consistently since the 1600's. Is this necessarily a bad thing? I mean that as a genuine question. The number of interventions to rescue people having asthma attacks has probably increased significantly over the same period. If a financial institution is about to go under isn't it better to have a process by which we can mitigate the pain it causes? To be clear, there is definitely a lot to be desired with the way a lot of bank bailouts have been handled (where Main Street absorbs the downside on behalf of Wall Street) that I think is largely down to politics and "elite" connections but I really don't think the frequency of intervention is an accurate metric by which to judge the effectiveness of the outcome.
- crisdux 5y ago
  I think it's bad from a moral hazard point of view. These institutions increase their exposure to risk. The interventions exacerbate inequality and other issues. These centralized intuitions are resistant to reform. Reform that does happen increase government reliance. I don't think serious people are advocating for zero interventions. We want a more resilient and fair system by design. Our centralized financial system has made interventions more common and larger in scale. Centralized vs decentralized is a cost/benefit and risk trade off. I personally think we've gone too far in centralizing our financial system.
  - lottin 5y ago
    What do you mean by centralised? The financial system is not centralised. It's regulated and overseen by a central authority, but the financial system itself isn't centralised.
    - arka2147483647 5y ago
      One might argue that if it is the central bank, or the goverment, that underwrites all the risk, then it is that authority who ultimately decides what banks can or cannot do. And therefore banks are not independent, but subservient, to central authority.
throw0101a 5y ago
> In short, over the course of at least five centuries, the financial system has grown more and more dependent on governmental support. Governments have become a more and more important part of people's lives. Back in the day your contact with "government" would be the local squire/sheriff. Nowadays you have general defence by a standing army, coast guard, air traffic control, health inspectors, health care, actual police officers / law enforcement (which only came into being as a standing bureaucracy in the 1800s IIRC). Is it any surprise that they've grown into financial fields as much as they have in other areas of society? As civil society and civilization has grown bigger and complex so has the infrastructure around it.
- edgyquant 5y ago
  Police officers in the form of sheriffs have existed since the 1600s in the US, though they were mostly for enforcing tax collection until the 1800s.
rufus_foreman 5y ago
>> In the meantime, please do yourself a favor and take a look at Figure 6 on page 31, which shows that the number of interventions to rescue financial institutions around the world has been increasing consistently since the 1600's. I'm looking at it. Looks like it is "Absolute # of interventions". Doesn't seem to be per capita. Do you know if it is? If it is not per capita, that's just a chart of population growth. The population has increased since 1665, for those of you who didn't know that. Does this tell me anything else?

by cs702 5y ago

dannyw 5y ago

My interpretation is that society has been increasingly dependent on the financial system. Who keeps cash anymore? It's almost illegal on many jurisdictions. It's no longer something you can opt out of, especially since the covid pandemic.

soperj 5y ago
It wouldn't be such a long build up if that were the case.
bserge 5y ago
So fucking nationalize them when they fail. Resell them after instating jail time for all the chief executive gamblers. Would it really be worse than bailing them out with public money?

waihtis 5y ago

> In short, over the course of at least five centuries, the financial system has grown more and more dependent on governmental support. More like: over the course of the last five centuries, financiers have grown more and more adept in outsourcing their losses to the government.

tehjoker 5y ago
True, but you also have to ask if they can actually function without government support in the current environment. The masters of the universe are the walking dead.
- cudgy 5y ago
  Why do they need to function if they are inherently dysfunctional? Poor decisions should not be rewarded with top heavy bailouts.
worrycue 5y ago
> outsourcing their losses to the government. Didn’t the US government actually make a $109 billion profit from TARP when it was all said and done? https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/
- waihtis 5y ago
  Interesting site, thanks for it. I wonder if something similar exists for the EU bailouts.

elliekelly 5y ago

> In the meantime, please do yourself a favor and take a look at Figure 6 on page 31, which shows that the number of interventions to rescue financial institutions around the world has been increasing consistently since the 1600's. Is this necessarily a bad thing? I mean that as a genuine question. The number of interventions to rescue people having asthma attacks has probably increased significantly over the same period. If a financial institution is about to go under isn't it better to have a process by which we can mitigate the pain it causes? To be clear, there is definitely a lot to be desired with the way a lot of bank bailouts have been handled (where Main Street absorbs the downside on behalf of Wall Street) that I think is largely down to politics and "elite" connections but I really don't think the frequency of intervention is an accurate metric by which to judge the effectiveness of the outcome.

crisdux 5y ago
I think it's bad from a moral hazard point of view. These institutions increase their exposure to risk. The interventions exacerbate inequality and other issues. These centralized intuitions are resistant to reform. Reform that does happen increase government reliance. I don't think serious people are advocating for zero interventions. We want a more resilient and fair system by design. Our centralized financial system has made interventions more common and larger in scale. Centralized vs decentralized is a cost/benefit and risk trade off. I personally think we've gone too far in centralizing our financial system.
- lottin 5y ago
  What do you mean by centralised? The financial system is not centralised. It's regulated and overseen by a central authority, but the financial system itself isn't centralised.
  - arka2147483647 5y ago
    One might argue that if it is the central bank, or the goverment, that underwrites all the risk, then it is that authority who ultimately decides what banks can or cannot do. And therefore banks are not independent, but subservient, to central authority.

throw0101a 5y ago

> In short, over the course of at least five centuries, the financial system has grown more and more dependent on governmental support. Governments have become a more and more important part of people's lives. Back in the day your contact with "government" would be the local squire/sheriff. Nowadays you have general defence by a standing army, coast guard, air traffic control, health inspectors, health care, actual police officers / law enforcement (which only came into being as a standing bureaucracy in the 1800s IIRC). Is it any surprise that they've grown into financial fields as much as they have in other areas of society? As civil society and civilization has grown bigger and complex so has the infrastructure around it.

edgyquant 5y ago
Police officers in the form of sheriffs have existed since the 1600s in the US, though they were mostly for enforcing tax collection until the 1800s.

rufus_foreman 5y ago

>> In the meantime, please do yourself a favor and take a look at Figure 6 on page 31, which shows that the number of interventions to rescue financial institutions around the world has been increasing consistently since the 1600's. I'm looking at it. Looks like it is "Absolute # of interventions". Doesn't seem to be per capita. Do you know if it is? If it is not per capita, that's just a chart of population growth. The population has increased since 1665, for those of you who didn't know that. Does this tell me anything else?