In the calm before the storm..............

The Grumpy Economist (John Cochrane) welcomes a "conversation" with  Neel Kashkari of the Minnesota Fed on the Too Big To Fail financial institutions:

"When the technology bubble burst in 2000, it was very painful for Silicon Valley and for technology investors, but it did not represent a systemic risk to our economy. Large banks must similarly be able to make mistakes—even very big mistakes—without requiring taxpayer bailouts and without triggering widespread economic damage."

"A second lesson for me from the 2008 crisis is that almost by definition, we won’t see the next crisis coming, and it won’t look like what we might be expecting."

"The financial sector has lobbied hard to preserve its current structure and thrown up endless objections to fundamental change.  Many of the arguments against adoption of a more transformational solution to the problem of TBTF are that the societal benefits of such financial giants somehow justify the exposure to another financial crisis. I find such arguments unpersuasive."

full post is here.