That is, institutions should be forced to both mark to the market nightly for all instruments where there is a price, and where there is not, the "market price" is taken to indicate that the entire loan is unsecured. If you then force banks to hold one dollar of actual capital for each dollar of unsecured lending they do at all times then there is no systemic risk.
There's also no levered 50:1 returns, or 20:1, or 30:1 of course, but is this a good thing or a bad thing?
For the banksters it's a bad thing. But for society as a whole, the stability of the markets and sustainable economic policies it is a very good thing.
If banks can't withstand their balance sheets being marked to the truth then shut them down. That's why we have bankruptcy - to cover exactly this contingency.
Of course Lagarge argued over the weekend that these institutions should be "recapitalized" - including by financially raping you, your children, grandchildren and those not yet born if necessary. But financial******is really no different than the more-pedestrian sort, in that both take place through the use of force. That we have sharply-dressed protagonists in one case and a sweaty, disgusting example of a thug in the second doesn't change a thing about the essential character of the act - in both cases you are violated, being forced to do something for the pleasure of another at gunpoint.
Four years into blindingly-obvious examples of this abuse by Treasury Secretaries, Congress, Presidents and international organizations such as the IMF, each of which has endeavored to protect those who took knowingly and outrageously unsound actions and asset-stripped the populace through these practices we are long past the point in time where the public's reactions to such jackals at the door should be to slam said door on their fingers - or necks.
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