Take it easy on global rules…some global leveraging has already been too much!
Sir Philip Stephens in “After the crash: why global capitalism needs global rules” September 19, mentions that “mistakes of recent years have not been so much about the absence of regulation, but a failure to act. The central bankers and the regulators were simply asleep on the job”. I do not think Stephen is really aware of how right he is.
The regulators overregulated the imposition of sentries on the financial markets, the credit rating agencies, to watch out for risks and with that everyone went to sleep; markets, regulators and at the end even the sentries.
And so when designing next round of global rules it would be helpful to do so with the humility that comes from accepting that in the initial efforts of generating a good global financial public-goods, such as the use of the credit rating agencies, they seem actually to have produced a public-bad. If a subprime mortgage is awarded in an irresponsible way, you want to keep it local; you do not want to give them AAA wings to fly.
The regulators overregulated the imposition of sentries on the financial markets, the credit rating agencies, to watch out for risks and with that everyone went to sleep; markets, regulators and at the end even the sentries.
And so when designing next round of global rules it would be helpful to do so with the humility that comes from accepting that in the initial efforts of generating a good global financial public-goods, such as the use of the credit rating agencies, they seem actually to have produced a public-bad. If a subprime mortgage is awarded in an irresponsible way, you want to keep it local; you do not want to give them AAA wings to fly.
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