Word: centralizes
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...also at play, with imprudent lending driving out prudent lending. This tends to occur as responsible institutions see their market share fall while those of irresponsible institutions rise, and decide to emulate the reckless practices they previously eschewed. The phenomenon was particularly prevalent in the mortgage market. Central bankers cannot escape censure, either. In his memoirs Alan Greenspan, former chairman of the U.S. Federal Reserve, writes: "I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk, and that subsidized home-ownership initiatives distort market outcomes. But I believed then, as now, that the benefits...
What, then, needs to be done? Government and central bank action, around the world, must have two objectives. The first is speedy intervention to prevent a self-perpetuating downward spiral, which means protecting depositors at minimal long-term cost to the taxpayer. The second is to ensure so far as possible that future booms are less exaggerated. This has implications for the form of any rescue package, and for the system of financial oversight that is put in place...
...rescue packages are concerned, the presumption must be that, for institutions that avail themselves of a government or central bank rescue operation, the managements concerned lose their jobs, and the shareholders lose their money. This is not vindictiveness: it is needed to prevent moral hazard and to ensure more prudence in future, and of course to protect the taxpayer. As for oversight, banks and other financial institutions clearly need to be far better capitalized than the existing rules require...
...above all, everyone - banks, borrowers, regulators, central bankers and politicians - must be ever mindful that there is no such thing as an end to boom and bust...
...Tootsie Roll center of a Tootsie Pop 9) Consecutive days spent on World of Warcraft 10) Number of Miley Cyrus songs on your iPod 11) Your record highest score on Rock Band 12) Number of jobs you’ve held without getting fired 13) Number of Central Asian states you can accurately spell 14) Number of times you failed your driving test 15) Number of cable knit sweaters owned