The panel I am on is shifting its topic a bit to include some discussion of the latest crisis. Although this is more topical, it is not exactly moving in a direction that fits my knowledge of Modern Monetary Theory (MMT). I see two broad issues. The first is the discussion of bank failures (so far!) which I have a limited ability to comment on. The second is more useful for a MMT debate: interest rate policy is not exactly as costless as neoclassical arguments suggest.
I wonder why the Credit Suisse restructuring did not convert the AT1 bonds to equity instead of killing them. My understanding is that at least under EU bank crisis resolution law, it is an available option and should be employed when equity owners are not imposed losses.
I hope that in a future post you can go more deeply into the "stimulative effect of interest payments when a country's debt/GDP ratio is "high." Most of the MMT literature tends to look askance at the mainstream obsession with that ratio.
I wonder why the Credit Suisse restructuring did not convert the AT1 bonds to equity instead of killing them. My understanding is that at least under EU bank crisis resolution law, it is an available option and should be employed when equity owners are not imposed losses.
I hope that in a future post you can go more deeply into the "stimulative effect of interest payments when a country's debt/GDP ratio is "high." Most of the MMT literature tends to look askance at the mainstream obsession with that ratio.