#1 We must not get diverted by the financial sectorÂ’s opposition or by populist rage. We must focus, instead, on the core issue. Trying to make financial systems safer has made them more perilous. Today, as a result, neither market discipline nor regulation is effective. There is a danger, therefore, that this rescue will lead to still greater risk-taking and an even worse crisis at some point in the not too distant future.
Either we impose a credible threat of bankruptcy, or institutions we have to support are made safer, or, better, we have both of these. Open-ended insurance of weakly regulated institutions that take complex gambles is intolerable. We dare not return to business as usual. It is as simple – and brutal – as that.
Well said. While I like his optimism re: the recovery, I'm not sure that it feels right for what's happening here in the USA. With the realistic fear of continued job losses, I don't see it. But then, expectations can drive the recovery, so I'm willing to feel all hope and changey and pretend that another boom is just around the bend. |