One Must Say

日期:2014/03/27

One must say that there is no reason to believe that banks are subject to always doing the wrong thing, putting on excessive risk. They've made mistakes in the past. That doesn't mean they will make them in the future. To assume that they don't learn, that they're more prey to error than others, is wrong. There are probabilities associated with their activities and expectations and distributions of the expectation. They make decisions. To assume that they should prepare now for a repeat of 2008 would be irrational. Perhaps there could be check points, where as they get closer to various pitfalls, they adjust their positions. That's what everyone in the world does,—- banks would do it also. Why should they prepare now for an event that occurs 3 times each hundred years. Anyone in the options business for example adjusts their position. They are not subject to wide spreads. I believe I've made my gist clear. They are flexible, and should be. The analogy with the bridge which usually can't be changed in its structure is not relevant for human being with access to many different alternatives to structure their balance sheet and access to many liquid markets.