Re-Regulating Finance

So argues top Financial Times columnist Martin Wolf in a piece that will warm Jim Stanford’s heart:

“What seems increasingly clear is that the combination of generous government guarantees with rampant profit-making in inadequately capitalised institutions is an accident waiting to happen – again and again and again. Either the banking industry should be treated as a utility, with regulated returns, or it should be viewed as a profit-seeking industry that operates in accordance with the laws of the market, including, if necessary, mass bankruptcies. Since we cannot accept the latter, I suspect we will be forced to move towards the former. ” 

One comment

  • “Accident waiting to Happen”, isn’t that a Billy Bragg song!

    How about another song, “Over and Over Again”, Neil Young for the lessons that should have been learned so long ago when it comes to financial markets.

    Mind you I do like the people who make up the titles for the FT articles, quite a creative lot aren’t they.

    Given the decentralized nature of the American banking system, it will take some doing to regulate. I am sure there is a long interesting history there and some more bad history ahead. Not a fine time to have ones banking institution to be coming apart at every nail, in the midst of long costly war, debt burdens, runaway trade deficits, a dollar in free fall, rampant income polarization, to name a few.

    I think it might be an extremely valuable topic to go a lot deeper into in exploring the ramifications for our economy. I know that there have been some attempts to date but now that the story is unfolding a bit more, I think it would be quite important to start leveraging some of the risks and impacts for our economy. The linkages are so great that possible scenarios and policy options would be a good row to hoe for a PEF type initiative.

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