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HomeT. Hoenig: ‘TBTF’ Banks Insufficient Equity Capital; The Case for Glass-Steagall
Posted by Larry Doyle on March 7th, 2014 7:05 AM |
I inadvertently overlooked a recent commentary written by a Sense on Cents favorite, Simon Johnson, that ran at Project Syndicate.
Johnson writes a fabulous piece entitled Truth From the Top highlighting the work of former Fed governor Thomas Hoenig about just how fragile our banking system truly is and how the politics of promoting the ‘too big to fail’ model have persisted. Let’s navigate.
It is unusual for a senior government official to produce a short, clear analytical paper. It is even rarer when the official’s argument both cuts to the core of the issue and amounts to a devastating critique of the existing order. (more…)
Simon Johnson’s Sense on Cents Classic
Posted by Larry Doyle on September 17th, 2013 9:15 AM |
On a daily basis we now get fed less than comprehensive if not fully distorted views of the last 5 years by an array of politicians, industry sponsored economists, and assorted other puppets.
While the airwaves and other outlets are filled with much of this noise, let’s take a step back so we can get the wide-angled view as to what has really transpired within our nation and the global economy. To do so, lets check in with Sense on Cents Hall of Famer Simon Johnson who provided a prescient view as to what was — and is — really going across a wide swath of our economic landscape.
In a Sense on Cents “past is prologue” classic, Johnson wrote back in 2009 in The Atlantic: (more…)
An Insider’s Indictment of the Financial and Political Fortress
Posted by Larry Doyle on July 6th, 2009 11:02 AM |
Simon Johnson
Why is the public at large so suspect of politicians and bankers? Why has the general media taken an enormous hit for not more fully exposing the holes in our economic foundation?
There is nothing like a 40% selloff across a wide array of assets to bring out cries for transparency and integrity. In that spirit, thankfully we have a former ‘insider’ within the financial and political fortress motivated to shed some real light on these pressing issues.
The Financial Times recently interviewed Simon Johnson, former chief economist at the IMF and currently a professor at the MIT Sloan School of Management (along with being a fellow contributing author at Wall Street Pit), and published Why Hopes of a Fast Recovery Have Been Much Exaggerated.
Johnson comments on the constraints he experienced at the IMF:
“I was trying to speak out while I was at the IMF,” he recalls, “but certain constraints come with position, and I found it was time to speak more bluntly than I could as an official.” (LD’s highlight)
While the economy and markets are screaming for transparency and integrity, Johnson succinctly puts forth what many have long held true–don’t believe any of what you hear from a politician or a banker, and only half of what you see.
Johnson does not stop there as he boldly further implicates the power base both on Wall Street and Washington:
And blunt he was in a recent article in The Atlantic entitled, The Quiet Coup, in which he noted a disturbing similarity between emerging market failures and the US. “Elite business interests – financiers in the case of the US – have played a central role in creating the crisis,” wrote Mr Johnson, “making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse.”
What he finds even more unnerving is that these special interests “are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.”
This theme of an incestuous, coordinated relationship between our financial and political industries is one I have worked to highlight often. I appreciate Johnson doing the same. While Johnson gives Washington some credit for utilizing a variety of tools to combat our economic troubles, he simultaneously indicts the Obama administration for being far too generous to the banks: (more…)
