Do not dangerously overcrowd the safe-havens.
Sir Willem Buiter in “The ‘submerging market’ crisis”, February 6, proposes that the US and UK Treasuries should cover the Fed and the Bank of England for the credit risks they take on when they purchase private securities. This is one good way of looking at it.
I would prefer the Fed and the Bank of England charging their respective Treasuries with a commission on all public debt issued. This way the Treasuries would know better that the benefits derived from safe-havens considerations is really not for them to keep; and also that it costs a bundle to keep ever more crowded safe-harbors safe.
That the markets trust Treasuries has more to do with the lack of alternative ports during a very difficult storm than with any intrinsic trust in the harbor chiefs. The governments need to humbly accept that before they and we are left with nothing.
I would prefer the Fed and the Bank of England charging their respective Treasuries with a commission on all public debt issued. This way the Treasuries would know better that the benefits derived from safe-havens considerations is really not for them to keep; and also that it costs a bundle to keep ever more crowded safe-harbors safe.
That the markets trust Treasuries has more to do with the lack of alternative ports during a very difficult storm than with any intrinsic trust in the harbor chiefs. The governments need to humbly accept that before they and we are left with nothing.
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