Simon Johnson:

[Brit banking boffins] Haldane and Alessandri offer a tough, perhaps bleak assessment. Our boom-bust-bailout cycle is, in their view, a “doom loop”. Banks have an incentive to take excessive risk and every time they and their creditors are bailed out, we create the conditions for the next crisis.

Any banker who denies this is the case lacks self-awareness or any sense of history, or perhaps just wants to do it again. ...

The Haldane-Alessandri “doom loop” is fast becoming the new baseline view, i.e., if you want to explain what happened or – more interestingly – what can happen going forward, you need to position your arguments relative to the structure and data in their paper. ...

How can we believe that for the regulators, “next time is different“? Most likely, next time will be exactly the same, with different terminology: the financial sector “innovates”, regulators buy their story that risks are now properly managed, and the ensuing bailout (again) breaks all records.

Simon Johnson:

Competition between banks is good – on this ["immaculate regulation" advocate Charles] Calomiris and I agree. We differ with regard to whether allowing large quasi-monopoly banks to dominate the landscape (e.g., Goldman Sachs and JP Morgan Chase today) is helpful to competition in any sense.

We should also throw into the mix three additional considerations.

Simon Johnson (and some sane central banksters*) diagnose the first; Yves diagnoses the second.

For my money -- BWAH-HA-HA-HA-HA-HA-HA-HA-HA! -- Yves has the right of it:

Simon Johnson:

Top people in the Obama administration now begin to understand what they have wrought.  The body language becomes uncomfortable when you bring up this topic and they are eager to discuss alternative ways forward.

But we are entering a new, more global era of state capture, and the US government (or, more precisely, its credit) was handed over – rather meekly – during the past 12 months.

(In case you don't know, that's French for "Lay back and enjoy it.") Baseline Scenario:

On Friday morning, Diana Farrell – a senior White House official – made a significant statement on NPR’s Morning Edition, with regard to whether our largest banks are too big and should be broken up.

 “Ms. DIANA FARRELL (Deputy Assistant for Economy Policy): We understand Simon Johnson’s views on this, and I guess the response is the following….  

 “Ms. FARRELL: We have created them [our biggest banks], and we’re sort of past that point, and I think that in some sense, the genie’s out of the bottle and what we need to do is to manage them and to oversee them, as opposed to hark back to a time that we’re unlikely to ever come back to or want to come back to.” (full transcript)

Ms. Farrell is Larry Summers’s deputy on the National Economic Council ....

Whaddaya mean, "we"?

The juxtaposition is amazing enough. Go read it all immediately. I can't really do justice to it right now, but do try to think through some of the implications in comments.

WKJM calls out superciliati. It's actually a fascinatingly Neo-Broderite reaction:

AP actually does some reporting; turns out it's not really banksters who own Timmy; it's just a few banksters, among them our favorite, Goldman Sachs:

The calendars, obtained by the AP under the Freedom of Information Act, offer a behind-the-scenes glimpse at the continued influence of three companies -- Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. -- whose executives can reach the nation's most powerful economic official on the phone, sometimes several times a day.

What the calendars show, however, is that only a select few can call the treasury secretary.