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A market cannot exist if the central government is guaranteeing loans (i.e. ensuring there are no survival incentives for lenders). Remove the guarantees, and
by sooheon 3y ago
A market cannot exist if the central government is guaranteeing loans (i.e. ensuring there are no survival incentives for lenders).
Remove the guarantees, and market will correct itself.
- gpapilion 3y agoIsn’t this what happened with the credit default swaps? Banks found ways to lend money and pass the rush between them, causing failure for everyone. Yet here we are again with a new version of the same issue.
- sooheon 3y agoEven dumber. Because this time it's not the banks outsmarting regulators with opaque products, it's the regulators themselves saying "lend all you want, we'll back the loan!"