{"id":9675,"date":"2014-04-13T08:27:23","date_gmt":"2014-04-13T12:27:23","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=9675"},"modified":"2014-04-13T08:27:23","modified_gmt":"2014-04-13T12:27:23","slug":"disturbing-trends-with-financial-crises","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2014\/04\/13\/disturbing-trends-with-financial-crises\/","title":{"rendered":"Disturbing trends with financial crises"},"content":{"rendered":"<p>From the Economist:<\/p>\n<blockquote>\n<p>Five devastating slumps\u2014starting with America\u2019s first crash, in 1792, and ending with the world\u2019s biggest, in 1929\u2014highlight two big trends in financial evolution. The first is that institutions that enhance people\u2019s economic lives, such as central banks, deposit insurance and stock exchanges, are not the products of careful design in calm times, but are cobbled together at the bottom of financial cliffs. Often what starts out as a post-crisis sticking plaster becomes a permanent feature of the system. If history is any guide, decisions taken now will reverberate for decades.<\/p>\n<p>This makes the second trend more troubling. The response to a crisis follows a familiar pattern. It starts with blame. New parts of the financial system are vilified: a new type of bank, investor or asset is identified as the culprit and is then banned or regulated out of existence. It ends by entrenching public backing for private markets: other parts of finance deemed essential are given more state support. It is an approach that seems sensible and reassuring. But it is corrosive. Walter Bagehot, editor of this newspaper between 1860 and 1877, argued that financial panics occur when the \u201cblind capital\u201d of the public floods into unwise speculative investments. Yet well-intentioned reforms have made this problem worse.<\/p>\n<\/blockquote>\n<blockquote><p>&#8230;..To solve this problem means putting risk back into the private sector. That will require tough choices. Removing the subsidies banks enjoy will make their debt more expensive, meaning equity holders will lose out on dividends and the cost of credit could rise. Cutting excessive deposit insurance means credulous investors who put their nest-eggs into dodgy banks could see big losses&#8230;..<\/p><\/blockquote>\n<p>Read more at <a href='http:\/\/www.economist.com\/\/news\/essays\/21600451-finance-not-merely-prone-crises-it-shaped-them-five-historical-crises-show-how-aspects-today-s-fina?fsrc=scn\/tw\/te\/bl\/ed\/slumpsthatshaped'>Financial crises | The Economist<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>From the Economist: Five devastating slumps\u2014starting with America\u2019s first crash, in 1792, and ending with the world\u2019s biggest, in 1929\u2014highlight two big trends in financial evolution. The first is that institutions that enhance people\u2019s economic lives, such as central banks, deposit insurance and stock exchanges, are not the products of careful design in calm times, &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/thepatientinvestor.com\/index.php\/2014\/04\/13\/disturbing-trends-with-financial-crises\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Disturbing trends with financial crises&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31],"tags":[1001,2367,3353,3434],"class_list":["post-9675","post","type-post","status-publish","format-standard","hentry","category-the-fed-banks-interest-rates","tag-deposit-insurance","tag-moral-hazard","tag-taxpayer-subsidies-of-private-sector-banks","tag-too-big-to-fail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Disturbing trends with financial crises - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Disturbing trends with financial crises - the patient investor\" \/>\n<meta property=\"og:description\" content=\"From the Economist: Five devastating slumps\u2014starting with America\u2019s first crash, in 1792, and ending with the world\u2019s biggest, in 1929\u2014highlight two big trends in financial evolution. 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Not all banks are created equal. The reason is deposit insurance for deposits under \u20ac100,000 implied that the government would stand behind its banks and\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6929,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/03\/10\/philip-maymin-why-financial-regulation-is-doomed-to-fail-library-of-economics-and-liberty\/","url_meta":{"origin":9675,"position":1},"title":"Philip Maymin, Why Financial Regulation is Doomed to Fail &#124; Library of Economics and Liberty","author":"Colin Twiggs","date":"March 10, 2013","format":false,"excerpt":"Philip Maymin highlights a problem with volatility: .....securities with historically low volatility tended to have almost twice as much subsequent risk, while those with historically high volatility tended to have almost half as much subsequent risk. For both the riskiest and least risky securities, therefore, historical risk is a statistical\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8096,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/07\/11\/us-banks-face-tougher-capital-requirements\/","url_meta":{"origin":9675,"position":2},"title":"US banks face tougher capital requirements","author":"ColinTwiggs","date":"July 11, 2013","format":false,"excerpt":"Yalman Onaran and Jesse Hamilton at Bloomberg report on a new joint proposal by the Federal Deposit Insurance Corp., Federal Reserve and Office of the Comptroller of the Currency: The biggest U.S. banks, after years of building equity, may continue hoarding profits instead of boosting dividends as they face stricter\u2026","rel":"","context":"In &quot;Australia &amp; NZ&quot;","block_context":{"text":"Australia &amp; NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7086,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/03\/19\/big-trouble-from-little-cyprus-ft-com\/","url_meta":{"origin":9675,"position":3},"title":"Big trouble from little Cyprus &#8211; FT.com","author":"ColinTwiggs","date":"March 19, 2013","format":false,"excerpt":"I always enjoy Martin Wolf's objectivity: Many insist that any tax on deposits is theft. This is nonsense. Banks are not vaults. They are thinly capitalised asset managers that make a promise \u2013 to return depositors\u2019 money on demand and at par \u2013 that cannot always be kept without the\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5753,"url":"https:\/\/thepatientinvestor.com\/index.php\/2012\/10\/15\/5-steps-obama-or-romney-must-take-to-fix-wall-street\/","url_meta":{"origin":9675,"position":4},"title":"5 Steps Obama or Romney Must Take to Fix Wall Street","author":"Colin Twiggs","date":"October 15, 2012","format":false,"excerpt":"By SUZANNE MCGEE In [Sheila Bair's] view ..... we haven\u2019t yet come to grips with many of the problems that produced the crisis. Too many regulators fall victim to one of several fatal flaws, Bair suggested in a speech to the National Association for Business Economics yesterday. Some of them\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":41219,"url":"https:\/\/thepatientinvestor.com\/index.php\/2023\/03\/12\/svb-update\/","url_meta":{"origin":9675,"position":5},"title":"SVB update","author":"Colin Twiggs","date":"March 12, 2023","format":false,"excerpt":"SVB Financial Group (SIVB) reported Thursday that it needed to raise $2.5 billion to cover losses on security investments. Its subsidiary, Silicon Valley Bank was closed Friday, with regulators appointing the FDIC as administrator. Total liabilities of the group are $195 billion, according to its last report, including $173 billion\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/9675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=9675"}],"version-history":[{"count":0,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/9675\/revisions"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=9675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=9675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=9675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}