There Is No Such Thing As Too Big In Free Market
October 17th, 2009 - 11:27am
Filed under Economy
"We must not allow giant, state-supported banks to believe that they are indestructible (Telegraph)". The economic repression was not a result of market failure, rather it was because of "excessive concentration, excessive leverage, spurious theories of risk management and moral hazard in the form of implicit state guarantees, combined to create huge ticking time-bombs on both sides of the Atlantic". Government interference has made the issue even worse. The government should instead offer incentives for the banks to shrink and divide by taking its protection out of the equation -- leaving the losses on the backs of the creditors and other stakeholders.
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