Economist Nouriel Roubini Calls Binance CEO a “Walking Time Bomb”

He was right tho. There should have been a recession way before the Lehman and subsequent housing bust. History is repeating itself again with the Covid downturn. The fact that the FED/government came to the "rescue" and pushed the recession into the future is irrelevant. The reasons he was positing recessions were sound and they eventually all came to fruition.

I know being early and/or late is considered being wrong. The fact remains he is calling it like he sees it. A reversion to the mean during a mania is a ballsy thing to predict. If the fundamentals are fucked, it will eventually correct.

It's easy to be "less wrong", or "wrong less often", by not predicting a recession in 2004, 2005, 2006, 2007/2008, 2011 and 2013. Yet it is not any more useful.

Ditto - Look at Paul Krugman, who used to be academic before going full Twitter.

In fact this is literally the only path to becoming a pop economist. You collect your prestigious degree and then realize it's a lot easier to sit on cable news and throw out crazy sound bites or write NYT articles about how the internet will never work and we need a bigger housing bubble than to do research.

I don't really understand the comparison of LTCM to FTX. Long Term Capital Management was a hedge fund. Hedge funds entire model are based on leverage and making big bets. Its customers were wealthy accredited investors and institutional investors who well understood this and understood the risks associated with hedge funds. FTX's customers had no such understanding that their deposits were being loaned out and used for making big bets.

Nationalize, recapitalize, and reprivatize. So that the benefits of government recapitalization don't get captured by the same people who caused the crisis.

Semi-independent federal reserves?

We can quibble about fiat/currency vs banking, but technically the government owns all money.

Granted, retail and last-mile banking seems a poor fit for government control.

Although from memory Japan offers retail banking services through their postal service? (for historical quirk reasons, see: https://en.m.wikipedia.org/wiki/Japan_Post_Bank )

Is’t what happened in 1929 in the us ?

https://www.federalreservehistory.org/essays/emergency-banki...

Title 2 above seems to describe a government appointed regulator in case of failure.

Well, speculators should not be backstopped at all.

But if you feel there’s no difference between stocks (an enforceable legal claim on the real property and intellectual property of an on going enterprise), housing (real property) and crypto (nothing, literally nothing) then there’s no point in discussing it.

> but anyone speculating in stocks or housing should be backstopped... Why?

Crypto is cauterised. There were inklings of institutionalisation, but the Fed raised rates before that took hold. This means the people and wealth in crypto can vanish without compromising much else, a statement I cannot make about most industries or assets.

I would also venture that most people suggesting we not backstop crypto were also opposed to bailing out banks. But unlike with banks or housing, there is no broader interest in crypto.

Before trying so hard to put your thoughts into the ether, stop for a moment and ask yourself if you can’t find the answer to that question. Is everyone on the fucking planet wrong? Or are you being stupid? Are stocks different from crypto? Why was there a need to bail out mortgage buyers? Did everyone just wake up one day and make a decision or is there detailed reasoning available for your perusal should you choose to look?

Because letting the fake crypto economy go to zero has no tangible effects on the real world, while letting stocks and housing go to zero has very real, very negative effects on people's lives.

Because a government is only as strong as its businesses and buildings/assets. Crypto is on another tier and apart from government.

because crypto is icky and weird

FTX was in bed with regulators and SBF was calling for more regulatory capture. The "reasonable regulation" trope is fit for parody.

Yes, DeFi has a high barrier to get into. But, once you are in the rabbit hole, there is no going back...

Ridiculous you are getting downvoted for stating something that is clearly true.

The American government, and several across the pond, literally did (partially) nationalize major banks and the treasury sold those shares back after the crisis, leaving the taxpayer with a pretty decent return. TARP earned a net benefit of 15 billion.

Then you're locking failed institutions into an even bigger monopoly. The problem is that they were already "too big to fail" as a result of regulatory capture, revolving doors between government and big banks and bailouts. Just let them fail.

Because that's communism.

(Not even /s, that's the actual argument people make)

Sounds like the same thinking for overpaying for college.

Indeed some 40% of Binance's reserves are in their own tokens.

https://markets.businessinsider.com/news/currencies/crypto-n...

>What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?

As to the rest of it, it is similar to any other speculative investment. If they like the future prospects, they'll assist. A liquidity crisis means there are not enough liquid assets to proceed with business.

You can read this as Binance seeking to eat the lunch of those which are unable to withstand depositors running for the exit. If there's no prospect of future luncheons, there's no bailout. The bit about stemming the hysteria and "we're all in this together" is the magnanimous marketing language you'd expect.

> "too big to fail"

I get bailing out the banks.

But we can bankrupt the owners, in the case of partnerships, and cancel the shares of public companies.

> No amount of money would make FTX a good asset

whatever your opinion of crypto, exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021.