Sabri Oncu wrote: > ... calling those who borrow short-term and lend > long-term banks is defendable.
If you want to, that's fine. Arguing about anyone's use of definitions is a worthless pursuit. Definitions are only for communication and clear thinking, not based in objective fact. If you want to use words in a way that others don't use them, it will undermine your ability to communicate with them. With luck, however, it may improve your understanding of the world. But don't expect those with power to pay any attention, as in "If we all start calling them banks, then maybe the regulators will hear us!" Instead, the regulators will start treating finance companies more like banks, in the sense of providing insurance or similar and regulating them, when (1) they start creating problems for the financial system, as AIG did even though it wasn't a "bank"; and (2) there is sufficient political pressure from Congress and/or Wall Street to treat them as banks. High political pressure can compensate for low spillover to the financial system and vice-versa. If a lot of everyday people (and not just a small group of pen-l malcontents) start saying that finance companies should be bailed-out or insurance and regulated, that can compensate for a relatively mild impact of such companies on the rest of the world. On the other hand, if GMAC threatens to fall and pull down a big chunk of the rest of the financial system, then the currently-existing pressure from the Wall Streeters will be sufficient. > Further, whether the regulators care > what we call these things or not depends on how many of us are calling > them banks and how loud we are. Did the University of Chicago > economists not win their battle by out-shouting the rest? At least in Chile after their 911 in 1973, their "shouting" was backed by bayonets. For the rest of the world, their flavor of economics was backed by the borrowers' needs and the creditors' (the IMF, etc.) willingness to leverage the situation for their ideological goals. The rise and fall of ideologies primarily reflects the changes in the balance of political power and the various challenges faced by the ruling elites. -- Jim Devine / "Nobody told me there'd be days like these / Strange days indeed -- most peculiar, mama." -- JL. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
