Monday, September 13, 2010

The Wall Street Journal, a quote regarding the Basel III developments:

"Officials want banks to have large stockpiles of capital so that they will be able to continue lending even if the economy worsens." Is this really the intent of the Basel Committee? To the degree the outlook for an economy worsens, borrowing/lending will increasingly contract as investment is based on forward-looking conditions and lending is based on counter-party risk. If the market hasn't already taught us this lesson, then it's because the market was not able to fully operate with an obstacle course of bad bailout practices.
(click on heading tfor link)

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