We simply have to face the fact that banking is fundamentally risky. As I decided long ago when working in banks, the reason we needed to wear dark suits and have classic buildings was to look conservative in order to offset the real riskiness of what we were doing. 

There should not be an Americas currency bloc

At this AEI event, Carmen M. Reinhart and Kenneth Rogoff discuss their new book, which probes an array of crises to show why the four most dangerous words in finance are "this time is different."

The US economy continues to disappoint and performs more poorly than original forecasts that were made by the more optimistic economists, who also tended to be supporters of the idea that our economy needs a big Keynesian stimulus. Sadly, this does not come as a surprise to many.

After many years of false starts, the Japanese economy may finally be set to boom—or at least to enter a period of sustained growth with a sharply rising stock market.

History shows us that sovereign governments often default on their loans, particularly in times of war or economic upheaval. Europe finds itself in this situation now and would do well to examine past sovereign debt crises—particularly, the European sovereign debt crisis of the 1920s—for lessons.

The debt limit, as currently defined, is meaningless. The limit does not need to be raised; it needs to be reformed.

Twenty-first century economists blithely talked of the "risk-free debt" of governments, and European bank regulators set a zero-capital requirement on the debt of their governments. The manifold proof of their error is that banks and other investors are now taking huge credit losses on their Greek government bonds. The only question is why anybody would be surprised by this.