Comments on: Lessons from the financial crisis: a libertarian perspective http://www.cobdencentre.org/2009/12/lessons-from-the-financial-crisis/ For honest money and social progress Wed, 08 Feb 2012 14:09:07 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Ryan M http://www.cobdencentre.org/2009/12/lessons-from-the-financial-crisis/comment-page-1/#comment-12100 Ryan M Tue, 26 Oct 2010 19:06:33 +0000 http://www.cobdencentre.org/?p=1659#comment-12100 And what have we learned here? I don't think we will ever be able to point the finger at just one person but I know we need a major revamp in our economy. These stimulant bills are just not working. As far as Obama's comment on the stimulus package, I think is absurd. He's basically saying to throw money at anything and we'll be okay. Now we are seeing the results of not using money wisely. And what have we learned here? I don’t think we will ever be able to point the finger at just one person but I know we need a major revamp in our economy. These stimulant bills are just not working. As far as Obama’s comment on the stimulus package, I think is absurd. He’s basically saying to throw money at anything and we’ll be okay. Now we are seeing the results of not using money wisely.

]]> By: Laeeth isharc http://www.cobdencentre.org/2009/12/lessons-from-the-financial-crisis/comment-page-1/#comment-214 Laeeth isharc Thu, 10 Dec 2009 00:49:31 +0000 http://www.cobdencentre.org/?p=1659#comment-214 Nice exposition. However in most cases there would have been no need for depositors to take a hit. There was adequate capital such that most depositors would have been fine, but for technical and political reasons the authorities decided to bail out bondholders. (This followed on from a bad habit/precedent established with the bailout of Continental Illinois in 1984). The technical reasons related particularly to derivatives markets. A default or restructuring of debt would have triggered cross-default clauses on hundreds of thousands of derivative contracts and made them disappear, destroying the carefully-hedged nature of portfolios in our world of modern finance. Bankruptcy and reorganization rules had failed to keep up with financial innovation. The political reasons hardly need to be discussed. Nice exposition. However in most cases there would have been no need for depositors to take a hit. There was adequate capital such that most depositors would have been fine, but for technical and political reasons the authorities decided to bail out bondholders. (This followed on from a bad habit/precedent established with the bailout of Continental Illinois in 1984).

The technical reasons related particularly to derivatives markets. A default or restructuring of debt would have triggered cross-default clauses on hundreds of thousands of derivative contracts and made them disappear, destroying the carefully-hedged nature of portfolios in our world of modern finance. Bankruptcy and reorganization rules had failed to keep up with financial innovation.

The political reasons hardly need to be discussed.

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