tag:blogger.com,1999:blog-7905515.post6099305236382188823..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: The Non-Linearity of Leadership CompetenceEric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-7905515.post-38574566309801577102012-08-01T12:01:27.385-05:002012-08-01T12:01:27.385-05:00This Sunday 7/29 blog really rattled some long dor...This Sunday 7/29 blog really rattled some long dormant brain cells. If I remember correctly, wasn't there a large discussion/fad back in the 70's along the lines of - "corporations/companies: small is better"? I think there were books with those titles as well...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-41674966856605847522012-07-31T17:32:07.583-05:002012-07-31T17:32:07.583-05:00Troy, most of what you've written is just not ...Troy, most of what you've written is just not factual. 'Goldman shorted Abacus', say. Goldman ended taking a good deal of the long position (and lost on it).<br /><br />And, the FDIC was part of 'Glass-Steagall', not something separate. Which is pretty good evidence that Glass-Steagall was not repealed.Patrick R. Sullivanhttp://hisstoryisbunk.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-19023524750354368712012-07-31T09:10:41.969-05:002012-07-31T09:10:41.969-05:00"The optimal organization for a family is com..."The optimal organization for a family is communist..."<br /><br />Living in a household with a super-majority of females, I'm holding onto my benevolent dictatorship for as long as I can thank you.Mercurynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-83086385979728010022012-07-30T16:49:31.550-05:002012-07-30T16:49:31.550-05:00Patrick, I had to laugh at your "almost all s...Patrick, I had to laugh at your "almost all sober studies" comment, as it sounded like a Krugman absolute statement.<br /><br />The fact is, banks, utilities, and trusts were all engaged in a myriad of pyramid schemes where they would underwrite a failed deal, then simply invest depositors money into the failed deal. Depositors were rightfully panicked, not solely because they didnt have government deposit insurance, but because investment banks were dumping their dredge securities into the accounts of widows and orphans that were unsophisticated and incapable of understanding the risks (even if they were told, which in many cases they were not). An extreme example, but accurate historical one.<br /><br />There were many early forms of leverage-on-leverage, ponzi-schemes, pyramids, and fraudulent underwriting in that period. Goldman shorted Abacus, whereas it shorted its own investment trust in the 1920's. Its remarkably identical.<br /><br />This forced legislators to create the entire 1933 framework, of which Glass-Steagall was simply one important element, think PUHCA, FDIC, etc. <br /><br />While Eric is incredibly smart, its a bit arrogant to pretend that you can pull out a big piece from the Jenga puzzle and state with 100% confidence that it had no impact (particularly after the Jenga puzzle clearly crashed to the floor!)Troynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-24429769746017168882012-07-30T15:04:06.146-05:002012-07-30T15:04:06.146-05:00'The only real way to control the size-factor ...'The only real way to control the size-factor is to limit the ability of traditional banking businesses to perform investment banking. '<br /><br />Almost all of the sober studies of the performance of commercial banks v. investment banks, prior to the Great Depression, tell us that the commercial banks had fewer losses. I.e. Sen. Carter Glass was dead wrong that speculative lending by banks underwriting corporate securities was an important cause of the Depression.<br /><br />Note that it was not corporate securities, but mortgage backed securities that were at ground zero of the current financial mess. As Eric correctly noted, Glass-Steagall had nothing to say about them. But its existence did delay the implementation of index funds like the S&P 500.<br /><br />That's all without mentioning that sections 16 and 21 of Glass Steagall are still law. That is, the sections that define commercial and investment banking.<br /><br />What has been repealed (under Gramm, Leach, Bliley in 1999) were sections 20 and 32; the 'affiliations provisions'. Which came in handy for Ben Bernanke in 2008, as it was a factor in alleviating the problems bedeviling INVESTMENT BANKS.Patrick R. Sullivanhttp://hisstoryisbunk.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-10501169764976256372012-07-30T09:20:33.512-05:002012-07-30T09:20:33.512-05:00While you are right about the size being the most ...While you are right about the size being the most important co-efficient, its a mistake not to pay attention to the core functions being undertaken. <br /><br />Given that banks have government backing of their deposits, they are in some sense the policeman of our money. In this sense, a small traditional bank making individual loans is like the policeman firing a revolver with limited ammunition. An investment banking operation is like a policeman with an automatic machine gun, which can spit out a lot of bad loans/products in rapid succession. The investment bank is dangerous whether it has a small ammunition magazine or a large one.<br /><br /> The only real way to control the size-factor is to limit the ability of traditional banking businesses to perform investment banking. No fool would lend money to Merrill Lynch's prop desk for the .05% rate that Bank of America is paying its depositors.Troynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-50130685481928644112012-07-30T04:06:49.240-05:002012-07-30T04:06:49.240-05:00This, it seems, raises an important question: how ...This, it seems, raises an important question: how do large groups get organised? If there is no überman available capable of leading in the traditional small-group fashion of being able to do everyone else's job better than they can, then what alternative do we have?<br /><br />Requiring a leader, a single person to be in charge and to carry the can for failure, seems to be a fundamental of human psychology. The levels of psychological discomfort felt by people when led by a committee of true equals are really striking.Richard Gadsdenhttps://www.blogger.com/profile/10545595590359552775noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-30574419049323218492012-07-29T20:42:05.556-05:002012-07-29T20:42:05.556-05:00"Consider that Bob Rubin was on the managemen...<i>"Consider that Bob Rubin was on the management committee at CitiCorp..."</i><br /><br />I think it was Citigroup by then, but it is amazing how Rubin's reputation for genius has declined over the last dozen years or so.Dave Pinsenhttp://steamcatapult.com/noreply@blogger.com