lifestyle leader

John Reed - the former head of Citibank - had some interesting things to say before the US Senate Committee on Banking and such things. See this transcript, which provides a brief, but excellent, list of observations. These lists aren't helpful in providing answers, but I think all of his points are worth keeping in mind when you set out looking for those answers.

For example: "Fourth, while much has been made of the low interest rate environment that accompanied the build up to the crisis, one would not design a financial system that could not function in such an environment."

This is the first time I've heard anyone frame the argument in this way. Alan Greenspan and Ben Bernanke have been taking a lot of flack for keeping interest rates low for an extended period of time, providing an easy-lending environment that led to excessive risk taking. There is good reason for this flack-taking.

But given the economic benefits to regular folks of having low interest rates for a steady period of time, is the problem the low interest rates or the abuse of those low interest rates by those financiers who get all antsy-in-their-pantsy when cheap money is lying around? I suspect it's the latter, so that should the focus of our regulators' attention.

That said, it is much easier for a central bank to raise the interest rate than to turn our investment bankers into socially responsible citizens (kidding!, sort of).