the LBs might still be useful in some roles, e.g., as wholesale banks to the savings banks that (to a greater or lesser degree) own them. Certainly I can think of at least one LB that is very well run (and has recently profited from the mistakes of its less prudent sisters).

I agree with you about IKB, though for clarity would point out that it is not a Landesbank. (However, the federal government is heavily invested in it through KfW, Germany’s development bank.)

No, it still pertains even over 30 years. The government has grown in influence and control over the eoconomy in the last 30 years despite the “free market” rhetoric of most leading politicians.

If the welfare state includes SS and Medicare, even that qualifies as expanding in the last 30 years.

What has been very consistent for most of the last 30 years is that the wealthiest and most politically connected americans have experienced declining tax rates, less and less regulation, and more access to government funds and benefits.

It’s crony-plutocracy billed as free market capitalism.

Right about Muenchau in the past.
Did you see this post from Muenchau too?

I do not want to discuss the merit of this particular statistic – which I cannot – but I believe strongly that the Fed is absolutely wrong to target a core-inflation index (and it is not even doing that with any great conviction and success). Core inflation is supposed to be more stable, as it excludes volatile categories of food and energy, but both categories have not been volatile, but persistently rising. To exaggerate a little (well, ok, a lot): All the troublemakers are taken out of the basket, the rest is adjusted.
…
One reader wrote to me that the 8% estimate for US inflation is probably still too optimistic, as it does not fully take into account the rise in wheat and other commodity prices, for example. Another important side effect of a potentially misjudged inflation series is that US growth is actually not higher than European growth – a claim that has lead to much soul-searching over here – as we are deflating nominal GDP growth by an excessively modest indicator. As for the apparently superior performance of the British economy, just try to deflate all those nominal prices by RPI, not the actual GDP-deflator used, and the economic miracle disappears.

Is he already a heretic? :)
Questioning the superior performance of the US and UK ecnomies in the last few years?

Concerning the “Landesbanken”.
Mrs. Tilton already gave an overview.
Actually they are pretty useless today, I´d say. That´s maybe the reason why some of them went so eagerly for these toxic investment “opportunities”. They lost their reason to exist when the EU went after their public “backing and guarantees”. The reason why they could get loans cheaper than “private” banks.
That was phased out in the early 2000s.
(The banks that were bailed out till today (IKB, Sachsen LB and West LB), were bailed out because German aauthorities didn´t want to see a German bank fail. Probably wrong in my opinion. They should have let at least IKB go bankrupt.)

Make that “the past 30 years,” and your sarcasm would seem to fall flat.

Must have been some trip! I wonder what they the good financial folk of Mumbai might have had to say.

I wouldn’t say in either case politicians have much incentive to get their house in order in the first place, rather they generally just vote their political philosophy (or financial self interest) until it goes too far and they have to fix things because the market in question is falling apart (in one way or the other).

Right, because the entire history of the past 70 years in the US is one long monotonic slide toward greater deregulation, with no significant expansions of the welfare state, invcreases in regulation, or strengthening of the public sctor along the way. Uh huh.

… yet another enormous blow to America’s ability to compel other nations to do as we do, or as we want.

Sadly, we’ll never get our own house in order unless (until?) we suffer a collapse on the scale of the Great Depression. Too much “free market” koolaid has been drunk by too many voters, on top of their already unshakable conviction that the US is by definition the bestest most awesome country ever.

But the Clemons piece suggests the opposite may be true: we need enough of a regulatory infrastructure in the U.S. to encourage investors to trust our institutions, and the our competitiveness should be enhanced by increasing—or at least improving—our regulations, rather than by resisting and reducing them.

What we need is the F.W. Taylor of Trust Studies, not another Aristotle. We need to know how to rebuild a trust structure in an ethically bankrupt institution or workgroup. We need to know how to identify and promote high-trust individuals at every stage of their careers. We need ways of defusing trust-destroying propaganda tactics. We need textbooks with titles like “Principles of Trust Engineering” and “Applied Trust Structure Design.”

The deadline for solving this problem is the next major petroleum war and the subsequent nuclear winter.

Not to quibble with your overall observation, but I’m not certain one can fairly lump Deutsche Bank in with the Landesbanken. (Viewed from one angle, Deutsche is a big London-based investment bank that happens for historical reasons to have a large retail network and a—currently empty—HQ building in another country.)

And as for the LBs, there are Lansdesbanken and then again there are Landesbanken. Not all are as badly run as SachsenLB or WestLB have been, and indeed some might even be termed sound. “Dipping their toes in the international financial system” is also a bit overbroad as a diagnosis of what hit SachsenLB, I think. The Int. Fin. Sys. offers plenty of boringly safe investment opportunities. SachsenLB’s problem was more, perhaps, one of “buying loads of toxic rubbish in a stupid attempt to recreate the yields they enjoyed back before the EU took away their artificially cheap funding”. (That’s another point of difference between Deutsche and the LBs, BTW: Deutsche and the other German commercial banks will have been very pleased indeed when the LBs lost the benefit of Gewährträgerhaftung and Anstaltlast.)