My Time to Waste

I do not pretend to understand the ins and outs of big banks and derivatives and what not.   My guess is that more regulation is needed.

On the other hand, even more important than regulation is leadership that will stand tall and address problems before they become disasters.

It was obvious there was a tech bubble at the time.  People made millions selling companies with little more than an idea.

It was obvious there was a housing bubble at the time.  People were making thousands of dollars flipping houses.  Often without doing anything to the house other than holding on to it for a few months.

Bubbles pop and damage the economy.

When the next bubble appears, what will be needed is a leader who will take action to gently let the bubble down, not regulations designed to prevent the last breakdown.

To be honest, regulating the economy is mostly over my head. Or, maybe, just boring to me. Either way, whenever an article mentions derivatives two or more times, it is iffy that I will get to the end.

Still, it is an important topic. I’m sure some argue that the less regulation the better. And I can’t argue that. As long as there is enough, there shouldn’t be more.

I’m guessing that every time an economic regulation is written, there are parties that immediately set about finding a way around it. So, even though it is important for the present regulatory scheme to be adjusted to new realities, we should never assume that all contingencies are covered.

It seems like what we really need is someone who identifies problems and acts on them. Didn’t most of America understand there was a housing bubble? Wasn’t this clear a couple of years ago? Or earlier? Didn’t Fed Chairman Greenspan complain of irrational exuberance in the stock market in 1996, four years before that recession?

In both cases, everyone understood that economic growth was being driven by bubbles. But no one had the political courage to do something about it. Maybe ending a bubble inevitably leads to a recession (and who wants to be responsible for that?), but I’m betting ending the bubble sooner rather than later would lessen the recession.

Maybe the next round of economic growth will be powered by an increase in productivity instead of a bubble. You know, for a change.