5 ms·
We need failure. Just like forest fires, we need controlled burns of dead wood
by Neywiny 1y ago
We need failure. Just like forest fires, we need controlled burns of dead wood
- nick__m 1y agoTo reuse your analogy, I fear that the forest wasn't managed properly and that the coming fire will do a lot more damage than a controlled burn. And I have no idea when it's going to start nor how to fireproof my investments !
- moandcompany 1y agoToo big to burn
- actionfromafar 1y agoControlled burn = good regulations. Too big to fail = put out all fires.
- bfg_9k 1y agoRegulations are what lead to private credit being what it is today. Post Dodd-Frank banks are unable to take on a lot of the lending risk with these style of transactions anymore which paved the way for asset managers to create the shadow banking system that exists today.
- deleted 1y ago[deleted]
- pixl97 1y agoThen you'll find a new set of regulations on private credit at some point in the future.
- dapperdrake 1y agoThe lending risk is the same. It doesn’t really matter what color the rug has. Stop sweeping.
- bfg_9k 1y agoIt's most certainly not the same. An asset manager going broke because they bought some bad loans is infinitely better off for the public at large than a bank becoming insolvent and depositors losing their money.
- walleeee 1y ago> And I have no idea when it's going to start nor how to fireproof my investments ! You don't, that's the idea.
- Terr_ 1y agoThe hypercolony of wood-termites, on the other hand... :p
- dyauspitr 1y agoSlow controlled burns that don’t bring down the ecosystem. For a hypothetical person in their late 50s, they’re looking forward to having their retirement go to shit and not recover before they’re dead.
- skopje 1y agoYeah I was a burn-it-all-down person too when I was in my 20's. It hits differently now after 40 years of work and the desire to retire and play with my grandkids. I guess in the current batch of 20'something's eyes that makes me The Man. I admire their spirit but scoff at their lack of empathy, the same lack I had. Fucking irony.
- eloisius 1y agoMight be better than putting it off until the discontent grows to the point that the young generation sees it fit to kill us off or confiscate everything we have and leave us standing in breadlines and living in collectivized apartments.
- skopje 1y agoTell me what to do. I go to protests. I vote. I volunteer for Indivisible. What ELSE should I be doing?
- m0llusk 1y agoKeep the focus on the evidence and the science. We have Picketty's book on Capital, Peter Turchin's research exposing elite capture and elite overreach, and perhaps most important the experience of digging our way out of the great depression with strong regulations, high taxes, and pervasive unionization of labor. Promoting the idea that we understand what is going on, have been here before, and know ways out can be very empowering.
- skopje 1y ago
- malshe 1y agoUnfortunately the government will bail out the billionaires and no new lesson will be learned. Exactly like what happened during the Great Financial Crisis.
- Spooky23 1y agoI remember my dad who was a great investor always said that and it was one of the things that disturbed him about QE and letting some of the big banks survive. What we’re seeing today with these quasi-public markets and even the AI mania is exponentially worse. We’re playing chicken with the whole economy, and the marginally effective regulatory regime has been completely gelded. On the other side of the coin. Two of the most powerful barons of the era believe they are eradicating the Antichrist and colonizing mars, respectively.
- missedthecue 1y agoInterestingly, the big banks today are some of the best run financial institutions in history. The real garbage in today's banking sector is in the mid-cap banks who went heavy into commercial real estate loans.
- Bratmon 1y agoSaving this for next time the big banks fail and demand a government bailout.
- mhh__ 1y agoI don't know what it would be, e.g. pretty major dislocations go untouched because the banks can't deploy capital into them like repo in 2019. It's quite possible that the drive towards central clearing kills someone e.g. by warehousing too much in one place/lack of discretion in margin requirements for a central house etc
- Spooky23 1y agoAgreed. In my city some midrange bank is financing a new commercial office space - the surrounding blocks are practically vacant. That whole category is practically useless for much anything other than allowing chinese people to get cash out of china.
- digdugdirk 1y agoOut of curiosity - what is the definition of a "well run financial institution"? I could imagine plenty of well run criminal organizations that make all sorts of profit via a combination of human trafficking and protection rackets. But is there an industry recognized understanding of what the best run financial institution would be?
- EA-3167 1y agoRight or wrong it would be political suicide for anyone with a shred of power to say that. Quite understandably the “dead wood” burning takes a lot of lives with it, and the people on fire tend to be understandably distressed and angry.
- rchaud 1y agoYou can get jail time if you're found to be responsible for causing the forest fire. That's what's needed in finance, otherwise it's just a matter of time until the next "financial innovation" befalls the economy.
- anon291 1y agoThe issue is this: the main driver of demand for higher-than-market returns is government pensions, and these cannot fail.