~ TGOBB ~ The Game Of Bank Bargains

~ NBWS-A-NSWB ~ No Banks Without States – And – No States Without Banks

~ I-SAEB-A-SAGI-WATSR? ~ If – Stable And Efficient Banks – Are – Such A Good Idea – Why Are They So Rare?

~ TN-RDOBC ~ The Non-Random Distribution Of Banking Crises

~ TCBNBSWTPPOTS ~ There Can Be No Banking Systems Without The Police Power Of The State

~ TITBSCEOASOGRISALFT ~ The Idea That Banking Systems Can Exist Outside A System Of Government Regulation Is Simply A Libertarian Fairy Tale

~ TINE-TGOBB-PAIIBR ~ There Is No Escaping – The Game Of Bank Bargains – Politics Always Intrudes Into Bank Regulation

~ A-B-I-B-D-APUE-TIA-B-TNFOB-DOTSOPRTOGCP-BNPG ~ A – Bank – Is – By – Design – A Potentially Unstable Enterprise – This Instability Arises – Because – The Normal Functioning Of Banks – Depends On Three Sets Of Property Rights That Only Government Can Provide – Banks Need Powerful Governments

~ B-AAAP-A-AHB ~ Banking – Is All About Politics – And – Always Has Been

~ ABCSDT-ISHLLOOLP-O-TG-COT-IDSB-GP-T-BC-A-ETI-C ~ A Bank Cannot Simply Declare That – Its Shareholders Have Limited Liability Or Other Legal Protections – Only – The Government – Can Offer These – It Does So By – Granting Privileges – Through – Bank Charters – And – Enforcing Them In – Courts

~ TRT-TAOLHTBFBOIB-IS-TPWAATRTG-RTALS-DNHTOTAA ~ The Reason That – Taxpayers Are Often Left Holding The Bag For Bailing Out Insolvent Banks – Is That – The People Who Are Arranging The Rules That Govern – Risk Taking And Loss Sharing – Do Not Have To Obtain Taxpayers’ Active Agreement

~ TITE-CR-AETCAM ~ The Institutions That Enforce – Contract Rights – Are Expensive To Create And Maintain

~ TIA-SER-C-WROL(CGBA)-IL-A-SCG ~ There Is A – Strong Empirical Relationship – Connecting – Weak Rule Of Law (Countries Governed By Autocrats) – Insider Lending – And – Slow Credit Growth

~ T-AASO-RE-F-TBS-OWTI-DI-O-GBOB ~ Taxpayers – Are A Source Of – Rent Extraction – From – The Banking System – Only When There Is – Deposit Insurance – Or – Government Bailouts Of Banks

~ ENHSFOG-CB-CBAN-SEAOFATST-RTPS-1600-TTICBBHTATIOTTGCTTCOAVS:R-M-A-F ~ Every Nation-State Has Some Form Of Government-Chartered Bank – Chartered Banks And Nation-States Emerged As Organizational Forms At The Same Time – Roughly The Period Since – 1600 – The Two Institutions Coevolved Because Banks Helped To Align The Incentives Of The Three Groups Crucial To The Creation Of A Viable State: Rulers – Merchants – And – Financiers

~ MCBEASE:MISAE-CENTTFTAW-A-MAADNTTHSTPO ~ Modern Chartered Banks Evolved As States Evolved: Monarchs In Seventeenth- And Eighteenth-Century Europe Needed Them To Finance Trade And War – And – Modern Autocracies And Democracies Need Them To Help Sustain The Political Order

~ TCBWNIO:IWTOOALSO-IE-I-TIONKOC-SA-DAABOE-A-TCONFO-PO-SA-TJ-SC ~ The Chartered Bank Was Not Invented Overnight: It Was The Outcome Of A Long Series Of – Institutional Experiments – Including – The Invention Of New Kinds Of Contacts – Such As – Debt Annuities And Bills Of Exchange – And – The Creation Of New Forms Of – Property Ownership – Such As – The Joint-Stock Company

~ RWAIGFBTWDWAUCOL ~ Rulers Would Act In Good Faith Because They Were Dealing With A Untied Coalition Of Lenders

~ J-SCAACFTR: BEIC(1600)-DEIC(1602)-DWIC(1621)-HBC(1670)-MC(1684) ~ Joint-Stock Companies And A Charter From The Ruler: British East India Company (1600) – Dutch East India Company (1602) – Dutch West India Company (1621) – Hudson Bay Company (1670) – Mississippi Company (1684)

~ ORHUTIO-T-C-J-SC-AAWTFTCOAOE-TRTTCS-MC-FABROOAOS-TC-IE-CTBOSI-SF-EOWW-G-PVP ~ Once Rulers Hit Upon The Idea Of – The – Chartered – Joint-Stock Company – As A Way To Finance The Creation Of An Overseas Empire – They Realized That They Could Sell – Monopoly Charters – For A Broad Range Of Other Activities Of State – They Could – In Effect – Carve The Business Of State Into – Separate Franchises – Each Of Which Was – Given – Particular Valuable Privileges

~ TDOTCBWDBTEN:TFTOILD-A-TFWTWIBAL ~ The Development Of The Chartered Bank Was Driven By Two Essential Needs: To Finance Trade Over Increasingly Long Distances – And – To Finance Wars That Were Increasingly Bloody And Long

~ TCOTCBAAFIOTMSSGRTAFI:F(P)M ~ The Creation Of The Chartered Bank As A Fundamental Institution Of The Modern State Soon Gave Rise To Another Fundamental Innovation: Fiat (Paper) Money

~ CBCTPMGRIESATCOTIGSDTGD-GIVTATEIAMPIOT-PEAMSP-RTPPTMPCWMAFIVOTC ~ Central Banks Came To Play Much Greater Roles In Economic Stabilization After The Collapse Of The Intentional Gold Standard During The Great Depression – Governments Increasingly Valued The Ability To Engage In Activist Monetary Policy In Order To – Promote Employment And Maintain Social Peace – Rather Than Passively Pursue The Monetary Policy Consistent With Maintaining A Fixed International Value Of Their Currency

~ SMBABMS ~ States Made Banks And Banks Made States

~ T-IR-HISO-TRIPF-NBOI ~ The – Industrial Revolution – Happened In Spite Of – The Revolution In Public Finance – Not Because Of It

~ IIGBBE-T-ACBTEAMOTCOFC-A-ICWVISIPOMO-WFTOB-WIINAC-AAPEWTMOSR ~ It Is Generally Believed By Economists – That – A Central Bank That Enjoys A Monopoly Over The Creation Of Fiat Currency – And – Is Charged With Varying Its Supply In Pursuit Of Macroeconomic Objectives – Will Fulfill Those Obligations Better – When It Is Not Also Charge – As A Private Entity With The Maximization Of Shareholder Returns

~ BCDJH-BSASTCWTCAMIC:B-TOSRITLAOI-A-HICOTBSTATLAWTRLAI ~ Banking Crises Don’t Just Happen – Banking Systems Are Susceptible To Collapse When Two Conditions Are Met In Combination: Banks – Take On Sufficient Risk In Their Loans And Other Investments – And – Have Inadequate Capital On Their Balance Sheets To Absorb The Losses Associated With Those Risky Loans And Investments

~ TPOAPC-IPTPT-GAPOTGAWST-[S]H-K-INITL-RPI-B-III-[H]H-OS-TI ~ The Power Of A Political Coalition – Is Precisely The Power To – Get A Public Official To Go Along With Something That – [S/]He – Knows – Is Not In The Long-Run Public Interest – Because – It Is In – His[/Her] – Own Short-Term Interest

~ B-PBIAETIIUBITTP:IDUITTOPACBTMFOOPRTFOHOPIESCC ~ Blame – Placing Blame Is An Enterprise That Is Inherently Unproductive Because It Trivializes The Problem: It Distracts Us Into Thinking That Our Problems Are Caused By The Moral Flaws Of Other People Rather Than Focusing On How Our Political Institutions Encourage Socially Costly Coalitions

~ TROTM-T-B-T-F-P-BAIS-TS-EBLB

~ The Rise Of The Megabanks – Too-Big-Too-Fail – Protection – Became An Increasingly Significant – Taxpayer Subsidy – Enjoyed By Large Banks

~ WATHFODE ~ Warnings Appear To Have Fallen On Deaf Ears

~ T-TOMDTB-TSC-RFAF-TWOLTMMRMTTHMB ~ The – Tsunami Of Mortgage Defaults That Became – The Subprime Crisis – Reflected First And Foremost – The Willingness Of Lenders To Make Much Riskier Mortgages Than They Had Made Before

~ RF-TPWNALOR-JPAPOIR ~ Regulatory Failure – The Problem Was Not A Lack Of Regulation – Just Piles And Piles Of Ineffectual Regulation

~ WGTTMTRNCWYACTTGIGTBYO? ~ Why Go To The Markets To Raise New Capital When You Are Confident That The Government Is Going To Bail You Out?

~ RAAOTPEIWTO ~ Regulators Are Aware Of The Political Environment In Which They Operate

~ BFAC:TCTTMMTO-FW-BSOH-QLAOFOATMTLORTWTTAACC-O-TCTWRBEAWREAAGGSN ~ Bankers Faced A Choice: They Could Try To Make Money The Old-Fashioned Way – By Seeking Out High-Quality Lending And Other Financial Opportunities And Then Matching The Level Of Risk They Were Taking To An Appropriate Capital Cushion – Or – They Could Take Wild Risks By Exploiting A Weak Regulatory Environment And A Generous Government Safety Net

~ T-T-B-T-F-P-P:I-IHNBC ~ The – Too-Big-To-Fail – Problem – Persists: Indeed – It Has Now Be Codified

~ RIAPOMH ~ Reality Is A Plague On Many Houses