Saturday, October 17, 2009

Alan Greenspan Joins the Classical Banking Club

Bloomberg reports (October 15) that the former Chairman of the Federal Reserve told the Council on Foreign Relations in New York, about the banks:
“If they’re too big to fail, they’re too big, (…). In 1911 we broke up standard Oil – so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”

Let us add that in 1911 very large firms usually had a big competitive advantage over smaller ones, while the reverse is true today. All other sectors’ largest firms have been downsizing, on average, and the conglomerates of the 60s disappeared a long time ago. Indeed, the banking sector has been able to avoid such an adaptation because of state support.

Read the article here .

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