Captain Obvious: Banking Crisis Bigger Than Before
September 14th, 2009Via: Bloomberg:
Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.
“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview today in Paris. “The problems are worse than they were in 2007 before the crisis.”
Stiglitz’s views echo those of former Federal Reserve Chairman Paul Volcker, who has advised President Barack Obama’s administration to curtail the size of banks, and Bank of Israel Governor Stanley Fischer, who suggested last month that governments may want to discourage financial institutions from growing “excessively.”
A year after the demise of Lehman forced the Treasury Department to spend billions to shore up the financial system, Bank of America Corp.’s assets have grown and Citigroup Inc. remains intact. In the U.K., Lloyds Banking Group Plc, 43 percent owned by the government, has taken over the activities of HBOS Plc, and in France BNP Paribas SA now owns the Belgian and Luxembourg banking assets of insurer Fortis.
While Obama wants to name some banks as “systemically important” and subject them to stricter oversight, his plan wouldn’t force them to shrink or simplify their structure.
Stiglitz said the U.S. government is wary of challenging the financial industry because it is politically difficult, and that he hopes the Group of 20 leaders will cajole the U.S. into tougher action.
I have put stop loss limits on my stock accounts and have started to transfer ‘retirement/401K’ monies from stocks into Treasury MM accounts…did make some money off the recent ‘green shoots of hope’ rallies in the market…not sure how helpful this will be in the long run but I don’t have much ‘free’ cash to put into actual gold…oh well, bed made, must lie in it…
I do keep getting the feeling this (Oct/Nov ’09 time frame; Jim Sinclair is also calling for ‘the big one’ during this time period as well) is the start of the extreme slide into Kunstler’s Long Emergency…maybe being too negative but like somebody said, nothing wrong with preparing for the worst and hoping for the best….