Michael Lewis’s Stockholm Syndrome; the Great Mortality Shift; “modern” browsers; very briefly noted; & Jonathan Levin, Joe Weisenthal, & Tim Kane on the Phillips Curve, on the Fed, & blaming the...
"highly illiquid--which a properly run exchange can never be"
That's the difference between economists and central bankers of the payment persuasion. Central bankers are a lot more paranoid.
Even a properly run exchange has limited liquidity. If one of its major counterparties goes bust, it can only rely on a limited pool of liquid collateral. After that, there is nothing but an unwind (shudder!!!!) or central bank liquidity. And the latter cannot be adequately collateralized unless the exchange is mutualized to the point of unlimited liability. And that is not going to happen in an exchange that is run as a for-profit corporation, as many are today.
And why the hell central banks abandoned unlimited mutualization is beyond me. Probably their market-worshipping instincts. Plus the contingent liability would not look pretty on the exchange's members' balance sheets.
"highly illiquid--which a properly run exchange can never be"
That's the difference between economists and central bankers of the payment persuasion. Central bankers are a lot more paranoid.
Even a properly run exchange has limited liquidity. If one of its major counterparties goes bust, it can only rely on a limited pool of liquid collateral. After that, there is nothing but an unwind (shudder!!!!) or central bank liquidity. And the latter cannot be adequately collateralized unless the exchange is mutualized to the point of unlimited liability. And that is not going to happen in an exchange that is run as a for-profit corporation, as many are today.
And why the hell central banks abandoned unlimited mutualization is beyond me. Probably their market-worshipping instincts. Plus the contingent liability would not look pretty on the exchange's members' balance sheets.
Ah. A dispute over "properly ru". If one single counterparty can bring you down, there is already a big problem...