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Jesu on a pogo stick

Danny Blanchflower and I discussed this yesterday. We agreed that the Fed has no choice but guarantee all depositors of all smaller banks in the US right now: unless they do there will be a flood of money to JP Morgan and a collapse in US banking. To pretend there is no crisis in US banking, created by the Fed, would be absurd in that case at this moment. Only state guarantees can prevent that crisis unfolding.

But the question is, what then? What price should be extracted for saving US banks, yet again?

Is it more tax?

Or the reversal of Trump’s regulatory relaxation?

Or more regulation?

And better audit?

Or a levy for the cost of capital that the state supplies to these banks?


The FDIC charges banks an insurance premium for the guarantees made on deposits up to $250k. The FSCS does the same (up to £85k) for UK banks. OK, so the move is now to guarantee larger deposits. Fine, the insurance premium rises. As, umm, we already have in the UK with the Bank Levy. It is precisely and exactly this thing. An insurance premium against the state backing provided against deposits not already covered by the FSCS scheme.

The ‘Tater’s all seeing gaze has failed to note that we already do this.

And we need the reseparation of this public service from the rest of banking, whilst mortgages move to a US model of state backed certainty with rates fixed for the life of the mortgage so that the threat to so many in this country, now being seen as rates rise, is removed forever.

Could this be done? Of course it could. But groupthink denies it because groupthink likes things the way they are.

And that’s just gorgeous. For Dick has now just reinvented Freddie Mac and Fannie Mae. You know, the two sources of vast perverse incentives – why worry about credit risk if the government’s going to buy it anyway – and more than a little market turbulence when they fail. As they did, two weeks after Willy Hutton insisted the country should have that Gordon Mac.


19 thoughts on “Jesu on a pogo stick”

  1. As with the train derailment story, it’s Trump’s fault – WTF did your boys do the last 2 + years? Well, we were going to re-regulate things, but we’ve been too busy with DIE crap.

    Couldn’t possibly be that your Chief Financial Risk officer was too busy with gay pride celebrations to do their job could it? Or that they weren’t hired because they could do that job?

  2. Why does ‘Danny’ Blanchflower, who (even if always wrong about everything) was a real economics prof at an Ivy League uni, waste his time ‘discussing’ with Spud? He must realise how clueless the man is – if that’s the only person he can get onside with his MMT thinking, he must be pretty desperate.

  3. The Danny Blanchflower he has been having discussions with is presumably the defunct midfielder who played for Spurs and Norn Ireland. Lovely player. I didn’t know he cultivated views on banking though.

    Nor did I know that Spud could contact him with his Ouija board. Most impressive. With which other dead souls does he commune? Is this the explanation for all the daft stuff he writes; do the dead tease him by feeding him silly ideas?

  4. Esteban nailed it.

    Sleepy Joe and Lizzy have been lamenting the relaxing of regulation under Orange Man Bad, whilst ignoring that they controlled Congress for 2 years. Why didn’t they fix it straightaway?

  5. Esteban / Henry, they tried to nail Trump for the derailment and consequent environmental catastrophe in East Palestine (no, not the one in the middle east). Train wreck ending up with lots of chemicals spread all over the countryside – ButtPlug solution: set light to it and blame Trump.

    View everything through the lens that it is all the fault of Trump / Brexit / Tories / /Neo-liberals / Fatcher et al…..

  6. O/T Just got mail from the Torygraph. They’re upping the charge for online access to £19.99/m. From 12.99. A whole 7 squid. Since the price of pixels are paid for at this end & the idiots who write for it would be overpaid free, one does wonder why.
    OK they broke the Handycock Whatsappery story & full marks for that. But they were just as culpable for swallowing the Project Fear as any of the rags & if I have to read another lifestyle article about middle-class tossery, I’ll be losing the will to live.
    So I’m thinking enuff’s enuff. A score’s a heavy price for wasting 20 minutes of my mornings. Maybe the news matures better when someone else has read it first. Carry on Tim!

  7. And to add insult to injury, the links in the e-mail both produce “URL- cannot be found”

  8. BiS

    From recollection they only increased it about 6 months ago! Will definitely be taking the Sam Goldwyn approach:

    ‘You can include me out’

    As for the potato -he hasn’t got a clue about anything. His historical ignorance in particular really does beggar belief.

  9. @BiS
    I read the telegraph (mainly for Andrew Orlowski’s weekly column) free, simply by disabling Javascript on the web site. I can’t see why this wouldn’t work in Dagoland.

  10. Anyone know how to read the Speccie for free these days? The javascript thing used to work there too, but they’ve cottoned on to that now.

    Thanks, in eager anticipation.

  11. BF – Speccy

    If blocking JS no longer works, then Shiney’s solution (for Firefox in my case, but it’s the same link, scroll down) must still be working just fine. There may be the occasional premium article that fails (and I can’t be bothered to explore further) but generally good.

  12. FWIW, I’m currently happy to pay for the Speccie.

    Not, however, the ex-Torygraph nor the Times…

  13. BiTex:

    Me too, but Amazon have just e-mailed to tell me they won’t be handling the Speccy after September. I could get an on-line sub I s’pose but I like to read it in the pub. Don’t know what to do yet.

  14. I’ve never signed up for the free-stuff army. I have no objection to paying for stuff. If nobody paid, it wouldn’t exist. It’s more VFM. And sorry, but the Torygraph was hardly that at the old price. Not sure it’s worth the trouble of hacking it for free, these days. If I want to read tripe, at least the Mail has decent totty pics.

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