An unexpectedly busy day at work yesterday dealing with a small crisis threw me off, so here’s a summary of what I meant to post:
- David Brooks had a column on the emergence of behavorial economics and what he claims are the now obvious failings of classical economics and the notion of rational actors and efficient markets. This is one of my favorite topics. Interesting to see it come to the forefront among general interest columnists.
- Another warning on the rise of protectionism and nationalism, this time from Paul Krugman.
- If some banks are too big to fail, then let’s make them smaller – and quickly! We are essentially nationalizing the biggest banks, so if we own them, let’s break them up and fire the managers who led us into this mess. As taxpayers we should all be outraged by the deals that the “too big to fail banks” are getting. No, they cannot be allowed to fail, but there’s no reason to allow them to continue on in their present form – a form that has proven to be disastorous.
- The risk of ETNs vs ETFs is becoming quite clear as the banks that back ETNs, Barclay’s for example, come under increasing financial pressure.
- If you want to get a taste of the sort of financial regulation that is coming, see this article in the latest The Economist. A report from a group of economists and policy makers that includes many of the senior people in Obama’s circle. It calls for some big changes, including separating much of the banking and investing functions that have been getting merged together of late. “All that talk of the biggest overhaul of financial regulation since the 1930s just took a step towards reality.” I hope this sort of thing gets implemented quickly.