.... I do not understand why (competing) banks are allowed to loan each other, competition law does not allow competitors in other business sectors to loan each other or lend or sell each other their "products" (in this case derivatives and the like).
Plus IMO the US needs a social security system a la France. UK, Canada, Germany, etc, as a safety net coupled with a more rigorous application of free market (less regulation) disciplines in most other sectors.
The real economy, that of small and medium size companies has been over-regulated for many decades now in the US and most other OECD countries and IMO it is that problem that lead to many bubbles in recent years. As per people in the US making a descent salary, before this crisis, US college educated people had almost "zero" unemployment, the problem was they had too high materialistic expectations (and absence of universal social sec). JMO
In addition this is a comment/question I submitted for T. Geithner, US Treasury Secretary in
Newsweek Geithner Interview on Facebook.
I do not understand why (competing) banks and other financial institutions and forms are allowed to loan each other; competition law does not allow competitors in other business sector to loan each other or lend or sell each other their "products" (in this case derivatives and the like). If they need more funds than those they have via deposits (commercial banks) or investors (others). they should not IMO be allowed to borrow from their "peers", other solutions must be sought, IMO, because the current system seems to install "systemic risk" rather than "diversifying it".
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