Making Too Big To Fail Costlier: A Check on Empire-Building

Testifying before the Financial Crisis Inquiry Commission on September 2, 2010, Ben Bernanke, chairman of the Federal Reserve, observed, “As of 2003 and 2004, there really was quite a bit of disagreement among economists about whether there was a bubble, how big it was, whether it was a local or a national bubble. We certainly were aware it was a risk factor, but frankly by the time it was clear it was a bubble” it was too late to address it through monetary policy. The NYT also reported that he spoke favorably of forcing huge banks to hold much more capital, particularly if they were systemically important — so much capital, indeed, that being big would be costly. He advocated that the increased capital requirements should include capital that is more aligned with risk and able to absorb losses more effectively, and that works in a countercyclical manner, so that banks have more of it during times of stress. Does his position make sense? Does it go far enough? 

The answer is at "Making Too Big to Fail Costly."

Source: http://www.nytimes.com/2010/09/03/business/03commission.html?_r=1&ref=business

Plato’s Justice: On the Conflict of Interest in Google’s Search Engine

“Google’s popularity was built on its ability to help people find just the right Web pages. Then came the social Web, led by Facebook.”[1] Then came the “fledgling Google Plus social network,” the content of which Google then included among other search results at its search engine. The idea, ostensibly, is to “personalize” internet searches.[2] In addition to expertise on a given topic, relevant comments and even pictures posted at Google’s social network may be listed, especially if from a friend. The added utility is debatable, however, particularly as content from other social media sites such as Facebook and Twitter is more in demand, according to Danny Sullivan of Search Engine Land. I question the relevance of even that content to a search on Google, given my searches up to now, though of course it is possible that someone’s post on X could be helpful if information on X is otherwise hard to come by. At the very least, Google ought to make it very easy for users to turn off the feature while at the search site.


The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

1. Claire C. Miller, “Google Adds Social Network to Search Results,” The New York Times, January 11, 2012.

2. Ibid.