Thursday, May 31, 2012

Simon sez...

...that James Robinson and Daron Acemoglu's latest book, Why Nations Fail, is a warning against...Jamie Dimon's sitting on the board of the NY Fed;

Jamie Dimon And The Fall Of Nations
Funny that Acemoglu didn't bother to mention Dimon (nor any other banker) when he visited Russ Roberts a short while ago to talk about his book.  His concerns seemed mainly to be about extractive politicians, of the kind found in North Korea, Zimbabwe, and Syria today, and history's tyrannies such as the Spanish conquistadors, and Communist thugs like Stalin and Mao.

One might even be led to believe that Acemoglu thinks things are going pretty well here in the USA, as one of his comparisons is the contrast between the bad outcomes in Mexico and the good ones in Arizona, even though the two are side by side.

But, then when one only has a hammer, everything looks like a nail;
The governance issue of the season is Jamie Dimon’s seat on the board of the Federal Reserve Bank of New York. Mr. Dimon is the chief executive of JPMorgan Chase, currently the largest bank in the United States. This bank is “too big to fail” – meaning that if it were to get into difficulties, substantial financial support would be provided by the Federal Reserve System (and perhaps other parts of government) to prevent it from collapsing.
Which ignores that when actual financial institutions, Bear Stearns and WAMU did fail in 2008, it was the Fed that came hat in hand to Mr. Dimon begging him to intervene.  Which he did.  His reward for that is now to be labeled a pariah for something that might happen (if we have active imaginations);
Since I wrote about this issue here last week, a great deal of support has been expressed for the recommendation that Jamie Dimon should step down from the board of the New York Fed – including by over 32,000 people who signed the petition I drafted. (The petition is addressed to the Board of Governors of the Federal Reserve, as only they have the power to remove a director of a Federal Reserve Bank.
Otherwise known as inciting the mob.

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