Very smart article by Niall Ferguson on the lessons to be drawn from the financial crisis. As one would expect, many of the wrong lessons have been learned by policymakers. As he says, the 1970s was a period of relatively heavy financial regulation and state controls over part of the banking system, and yet it was a grim period economically (unless you happened to be an OPEC oil producer). He also picks up on the point that Canada, which operates a broadly free market banking system, has not suffered anything like so badly as its neighbour, or indeed the UK. That’s mightily inconvenient for our own Gordon Brown in claiming that the crisis was like swine flu or a meteorite impact from outer space, rather than something that was caused in many cases right on his doorstep.
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Drawing the right lessonsMay 19th, 2009 |
 5 comments to Drawing the right lessons |
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Slightly OT:
We may see the first salvo, on this side of the pond, today in California as voters go to the polls for state budget proposals(Link)
Redstate actually reports the on Michael Martin’s resignation(Link)
Finally, South Carolina Governor Mark Sanford in defense of Libertarians(Link) (h/t Instapundit)
“Politics is the art of looking for trouble, finding it, misdiagnosing it, and then misapplying the wrong remedies” Groucho Marx
Yep. Seems to apply to this case..
From the article: “Who regulates the regulators? Until that question is answered, calls for more regulation are symptoms of the very disease they purport to cure. “
Oh well! So long, Niall Ferguson. I was just beginning to warm up to you.
But making a statement like the above means it will be a long, long time before the New York Times deigns to publish anything else you write.
I liked how he pointed out that it is odd to assume the problem was caused by deregulation when the crisis is happening now, nearly thirty years after deregulation. That is like the claim that this crisis is due to “greed,” when greed has always been with us, but this crisis is only occurring now.
Sadly the wrong lessons have already been “learned” (or, rather, acted upon).
All over the world, but especially in the United States and Britain, there are desperate efforts to reinflate the bubble (via both credit money expansion and government spending) and these efforts have and will have the effects predicted.
A short term stock market and other “recovery” (predicted by various people even on national television some months ago – for example on the Glenn Beck show) leading to another bust.
As for “deregulation” – banks, insurance companies and so on are regulated to bits. Book after book of regulation.
The idea that allowing retail banks to engage in merchant banking somehow caused the credit bubble is B.S.
The Federal Reserve system (and the Bank of England and the …..) caused the credit money expansion – and they did so (again and again) to prop up a financial system under political direction.
Fannie Mae and Freddie Mac were under orders (from Barney Frank and Chris Dodd) to push the “affordable housing” policy.
And if that meant the world trading in junk mortgage backed securities……….
Well greedy bankers would get the blame for the policy.
Not Congressman Barney Frank, or Senator Christopher Dodd – and certainly not the Community Organizer and ACORN Trainer in Chief now in the Whitehouse.