WHAT IS THE LESSON LEARNED FROM THE J P MORGAN-CHASE FIASCO? WHAT LESSON IS TO BE LEARNED FROM THE JP MOGAN-CHASE 2 BIL $ LOSS?: Economic journalist, Robert Samuelson, addresses this question in his May 16 th syndicated column. In my view, the interesting thing about it is that while he makes valid interesting points about what not to lean from it, he, accidentally or otherwise fails to identify the real lesson. He makes a plausible point that the real risk of mainstream banking is not the exotic and evil sounding things like “derivatives and credit swaps, etc. but in ordinary lending. He correctly points out that the big crises really stem from the volatile swings from extreme optimism to extreme pessimism which are difficult for “regulators” to effectively control. From all this, the “lesson” I see is that in the nature of the beast the only effective and practical remedy is to prevent the banks from getting so humongous that the inevitable swings paralyze the whole system. So the only answer is to BREAK THEM UP like we did with “Ma Bell”.
Posted by wayneecomer