That is not beside the point. You argue like someone disappointed with his football team, saying hey, these guys get millions for playing, why are they playing so bad, while the players play the best they can. If this doesn't justify millions in salary, the idiots that pay out the millions have made the mistake. You can't require super human abilities, independent of salary.
I am not demanding superhuman abilities. I am demanding that they don't behave like nine-year-olds on crystal meth in a candy store. Surely, that should be within their capabilities.
These institutions have been granted the privilege of printing money that is backed by the government. This privilege comes with a very simple countervailing duty: To not create money when it is not justified. They have - for whatever reason - failed in that duty, when the loans they grant default on a much greater scale than anticipated.
When you fail in your duty, you should take a haircut. That's all I'm saying. A goalie that keeps letting in softballs gets fired, to use your analogy.
But the way the international financial system is configured right now, means that the people who failed so signally in their duties will be bailed out. They will not take a haircut. And they will be bailed out by loans from their governments to the debtor countries' governments. Those loans will have to be repaid. So either the taxpayers of the debtor countries will be put on the hook for a haircut that the creditor institutions should by right be the ones to take (if the money is repaid eventually), or the taxpayers in the creditor countries will be put on the hook for that haircut (if the debtor countries default).
How's it fair to put taxpayers somewhere on the hook for debts that they neither issued nor incurred?
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
No. It is backed solely by the collateral they get for the loans. Not by the gov't.
When you fail in your duty, you should take a haircut.
Fully agreed. There shouldn't be any bank rescues without hair cuts.
And they will be bailed out by loans from their governments to the debtor countries' governments. Those loans will have to be repaid.
No. They are getting bailouts from their own gov'ts directly. HRE wasn't rescued by the Irish gov't with a German loan. The Landesbanken weren't rescued by the Icelandic gov't or the US gov't with loans from Germany.
Because they are part of a state, that has granted banking licenses without proper control. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
It is legal tender. That's a form of government backing.
Because they are part of a state, that has granted banking licenses without proper control.
I suppose you can make that case. I happen to disagree, but I suppose you can make the case.
Perhaps to some degree, but state's (not even democratic) mandate is not open-ended. There are limits, where individuals are not tied to government's decisions.
