Most of the people I have discussed the LTCM fianco with still believe the banking system would have gone belly up had Greenspan not "rescued" LTCM. I argue there was never any proof of that and we should have let LTCM go belly up just like we should have done with GM. Now they have created a dangerous precedent which will never end until the end. Am I wrong ?
Have long adhered to the view that the Federal Reserve under Greenspan crossed the Rubicon with the bailout of LTCM. This was the beginning of the "FED put" and the backstopping of the massively leveraged shadow banking system, not just in the United States, but worldwide. This led to the hyper-financialization of the U.S. economy, not to mention the active management of markets. The Great Financial Crisis showed the results whereby the banks and the "system" were saved but main street was sacrificed. Have always wondered why all financial players needed to be bailed out at 100% at that time. Wouldn't 99% still have provided some lesson?
Another great read. Thank you.
Most of the people I have discussed the LTCM fianco with still believe the banking system would have gone belly up had Greenspan not "rescued" LTCM. I argue there was never any proof of that and we should have let LTCM go belly up just like we should have done with GM. Now they have created a dangerous precedent which will never end until the end. Am I wrong ?
Have long adhered to the view that the Federal Reserve under Greenspan crossed the Rubicon with the bailout of LTCM. This was the beginning of the "FED put" and the backstopping of the massively leveraged shadow banking system, not just in the United States, but worldwide. This led to the hyper-financialization of the U.S. economy, not to mention the active management of markets. The Great Financial Crisis showed the results whereby the banks and the "system" were saved but main street was sacrificed. Have always wondered why all financial players needed to be bailed out at 100% at that time. Wouldn't 99% still have provided some lesson?