June 2nd, 2009 at 4:25 pm
danm-

by China pegging the yaun to the $ they keep their currency artificially low thereby exacerbating the trade imbalance with us and other countries-

their growth and prosperity cannot be at the expense of the rest of the world- als0
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And the US prosperity isn’t at the expense of the rest of the world? Talk about a pot calling the kettle black!

Bank’s are incredibly regulated and thus have lots of regulatory compliance costs. There are big time economies of scale in having a well developed regulatory department overseeing these responsibilities for a huge bank/huge bank holding company.

I agree totally, what I was trying to express (inarticulately) is that their are efficiencies to be gained in growing bigger from the perspective of the banks’ bottom lines, not from the consumer’s perspective.

This idea is a big part of Nassim Taleb’s black swan scenario. In trying to reap the benefits efficiency can have on the bottom line in a volume business like banking, you amalgamate risk and make the black swan event far more liekly maybe he will discuss it during his time at the TBP conference.

…..

“PAUL SOLMAN: What do you mean by “over-optimized”?

NASSIM NICHOLAS TALEB: Let me tell you what is happening in the ecology of the banking system. They’re swelling to large banks, OK, because it’s vastly more optimal to have one large bank than 10 small banks. It’s more efficient.

PAUL SOLMAN: Well, we’ve certainly seen the consolidation of the industry.

NASSIM NICHOLAS TALEB: Exactly. And that consolidation is what’s putting us at risk, because we are — when one bank, large bank makes a mistake, OK, it’s 10 times worse than a small bank making a mistake.”
http://www.pbs.org/newshour/bb/business/july-dec08/psolman_10-21.html

…

“Complex systems don’t allow for slack and everybody protects that system. The banking system doesn’t have that slack. In a normal ecology, banks go bankrupt every day. But in a complex system there is a tendency to cluster around powerful units. Every bank becomes the same bank so they can all go bust together.”
http://business.timesonline.co.uk/tol/business/economics/article4022091.ece?token=null&offset=24&page=3

should have flagged my last comment w/ [snark]-

however- this comment-

“I think this bubble’s going to be bigger than Greenspan’s last one.”

deserves some more analysis- I do believe another bubble will occur- at least that is what we are setting up for-

cheap money always need some place to go

“I want to get rich- and I don’t want to have to think about it”

Good luck. Money moves from the “sheeple” to the savvy.

so- what is the bubble train this time around?-

mannwich – emerging markets?- any other ideas-

I wan’t to get rich- and I don’t want to have to think about it