http://www.forbes.com/2009/05/19/fed...-bernanke.html


"Systemic risk is like pollution." paragraph is where is is wrong. He says that firms stop practicing market discipline when they think that are too big to fail. Well this is the problem, why do they think so? They think so because they own the politicians and the government comes to their rescue as shown by the original bailout.

Yeah systemic risk hurts parties that were not part of it, however systemic risk is just a new colorful word for already existing word for this which is panic. The current existing Austrian economics arguments against regulating panics apply here. Keynesian economics is like a fucking zombie you prove it wrong and it simply changes the names of the variables and comes back at you.