October 3, 2008
Floyd Norris Hits the Bull's Eye
Floyd Norris's column in today's New York Times, "Mistakes of the Past Live Again," is right on target. I can say little but to repeat its themes: Increasing deposit guarantees reduces the monitoring of banks by depositors; Changes in mark-to-market rules are driven by a desire to keep assets on balance sheets are artificially high prices, making interbank loans and other loans to banks more risky, not less, because people start doubting the accuracy of bank balance sheets.; Hasty rules against short-selling were not thought-out; And giving insolvent banks more money often does not make them solvent, it just delays decisive intervention. A wonderful op-ed.
October 3, 2008 | Permalink
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