Sunday, April 11, 2010

Misc: Greece and Roubini/Richardson Proposal

by Calculated Risk on 4/11/2010 05:49:00 PM

Note: The previous post is the weekly summary and a look ahead to a pretty busy week. Best wishes to all!

For those who missed the news, from the NY Times: Euro-Zone Nations Offer $40 Billion to Greece

A financial rescue of the debt-laden Greek economy moved into focus Sunday when the 16 nations that use the euro offered to lend Athens up to $40 billion, or €30 billion, at rates far below what the debt-laden country is paying now.
...
Greece has so far not formally requested aid from the European Union ... The I.M.F. will also make financing available to Greece, though the amount was yet to be determined. Olli Rehn, the European Union’s monetary affairs commissioner, suggested that euro-zone nations might end up providing two-thirds of the final package, with one-third coming from the I.M.F.
And a proposal from Matthew Richardson and Nouriel Roubini in the WaPo: How to reduce risk on Wall Street? Make the banks pay.
To create a truly safe financial system, we have to focus on two goals. First, we have to drive a stake through the heart of the "too big to fail" mantra that only fattens our financial beasts. Second, we should stop focusing on the problems of individual banks and look at the broader risk that the largest and most complex financial institutions pose.

We can accomplish both goals by charging such institutions an annual fee, or tax, or surcharge, or levy, or whatever the politicians need to call it.
I'm sure we will hear many more ideas this week at the Hyman P. Minsky Conference. The topic is After the Crisis: Planning a New Financial Structure.