Tyler Cowen’s essay on the inequality generated by the political economy of finance has received deserved attention. I think Tyler is exactly right that financiers are going short on volatility, that this is hard to detect and therefore regulate, that politicians have incentives to bail out the banks following increases in volatility, and that it leads to severe problems.
Globalize the banks, redux
Globalize the banks, redux
Globalize the banks, redux
Tyler Cowen’s essay on the inequality generated by the political economy of finance has received deserved attention. I think Tyler is exactly right that financiers are going short on volatility, that this is hard to detect and therefore regulate, that politicians have incentives to bail out the banks following increases in volatility, and that it leads to severe problems.