Thursday, April 7, 2011

Europe is heading into its own financial crisis

I thought this short piece by Daniel Gros was interesting, not so much because of what it said but by how it said it.  Europeans look at the the resolution of the American part of the banking crisis and see success--afterall we haven't defaulted yet.  But no one really knows how to stop the impact of the crisis.  Well, that's not true--increase reserve requirements,  and reinstate Glass-Steagell--and we could stop some aspects of it.  And create a set of new unknown problems.  Again, as we talked about on Tuesday night, we have a crisis in search of a theory. 
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2 comments:

  1. JaredCohenApril 7, 2011 at 5:51 AM

    Reenacting Glass-Steagall might be a good idea, but I wonder how significant the growing pains will be from such legislation. The 1999 repeal of the Act made it possible for significant events, like the merger of Citicorp/Travelers Group (Citigroup), and Bank of America buying Merrill Lynch. There are lots of examples of this on Wall Street, so I just am not sure how cutting the function of these major financial institutions in half would work out.

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  2. hannahappsApril 7, 2011 at 7:31 AM

    Jared, you are right. Time only runs in one direction. (except in theory and there we assume that time doesn't exist)

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