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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 08/31/2008 : 21:04:53
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Robert Shiller's views on bankruptcy (not the personal kind)
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Shiller: Bankruptcy Law Risks Meltdown 
Friday, August 29, 2008 8:23 AM
Robert Shiller, the Yale economist who correctly called the real estate bust, says bankruptcy law needs to be reformed to avoid a meltdown of the financial system.
If a major financial institution fails, bankruptcy law as it now stands may not be powerful enough to prevent a systemic crash, he argued in a New York Times opinion piece.
“Current bankruptcy law was not written with the perspective of systemic risk in mind,” wrotes Shiller, who also accurately predicted the stock market crash of 2000 to 2003.
“There is a big problem … when large financial institutions are at the margin between solvency and insolvency.
The formal declaration that an important financial institution is insolvent could threaten the whole economy.”
That’s why the Federal Reserve had to save Bear Stearns in March, Shiller says.
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And we thought those suffering foreclosure were going to swamp the system, if these financial titans fall, that could swamp the planet financially.
(Got cash? Better yet, got gold?)
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Shiller speaks about bankruptcy
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