Comments on: Banking on value http://affordablehousinginstitute.org/blogs/us/2008/03/banking-on-value.html Affordable Housing Institue Wed, 11 Nov 2009 21:03:17 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: J. Powers http://affordablehousinginstitute.org/blogs/us/2008/03/banking-on-value.html/comment-page-1#comment-6144 J. Powers Tue, 15 Apr 2008 23:32:22 +0000 http://affordablehousinginstitute.org/blogs/us/2008/03/banking-on-value.html#comment-6144 Also, your analysis suggests that the treasury--the lowest floor in the money department store--is currently doing the job (namely, boldly evaluating complex assets) of the investment bankers--the highest floor. If Bernanke turns out to be right, and he knows better than the investment banker what the investment banker's assets are worth, then your department store would seem to be upside down. And if Bernanke's wrong, then it seems clear that the tower of Babel (struck down by the invisible hand for building too high) is apter metaphor than a department store, since that would mean that the top floors, because they profit in proportion to their risk, have an incentive to induce and encourage risky investments. One way or the other, I don't see how the money department store model survives Bernanke's decision. An intriguing take on this over at Interfluidity: http://interfluidity.powerblogs.com/posts/1204920896.shtml Also, your analysis suggests that the treasury–the lowest floor in the money department store–is currently doing the job (namely, boldly evaluating complex assets) of the investment bankers–the highest floor. If Bernanke turns out to be right, and he knows better than the investment banker what the investment banker’s assets are worth, then your department store would seem to be upside down. And if Bernanke’s wrong, then it seems clear that the tower of Babel (struck down by the invisible hand for building too high) is apter metaphor than a department store, since that would mean that the top floors, because they profit in proportion to their risk, have an incentive to induce and encourage risky investments.

One way or the other, I don’t see how the money department store model survives Bernanke’s decision.
An intriguing take on this over at Interfluidity:
http://interfluidity.powerblogs.com/posts/1204920896.shtml

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