Daily Archives: January 6, 2011

It’s Only Common Sense

If the solution to a bank run is for the government to guarantee the depositors’ money, what’s happens when the government’s guarantee is itself called into question?

Even the CFR knows the answer:

Commenting on the European debt situation, the Council on Foreign Relations said: “In the midst of the financial crisis of 2008, governments helped to prevent bank runs by guaranteeing bank debts. Yet as sovereign solvency itself becomes an issue, such guarantees quickly lose their value. If Ireland provides a rule of thumb, bank runs can be expected once sovereign credit default swap yields pass 3%. The graph below shows that when Irish government CDS yields first passed 3% in early 2009, foreign deposits fled the country. This happened again in late 2010. Now that Spanish CDS yields have broken the 3% threshold, there is reason to be concerned about the stability of Spanish bank deposits as well.”

When will this malaise flare up again?”

In other words, more bank runs.

Oh, my.  We live in interesting times.

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Filed under financial crisis

A Real Lawyer Turned Judge? Not In This Life.

Norm Pattis hasn’t been paying attention.  For some reason he’s wondering why no Plaintiff’s lawyers or criminal defense lawyers are ever nominated to the federal bench.

It’s because, by definition, such lawyers have not been co-opted to power, and indeed by their very background have demonstrated that they are unwilling to be co-opted.  They represent individuals against institutions:  in the case of criminal defense lawyers, the institution is the government; in the case of Plaintiff’s lawyers, the institution is the insurance company that represents the party being sued (And there is effectively always an insurance company on the other side of an individual Plaintiff’s case, otherwise the suit would never be brought.)

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Filed under Judicial lying/cheating