Question for readers: financial regulation edition
Yglesias has a post today arguing basically that financial regulation is where liberals and Democrats should be uncompromising. And while that’s not exactly what the post amounts to – since it essentially admits to the need for compromise even there – I think he makes some good points.
I admit to having a less-than-admirable understanding of financial regulations myself. I think that applies to most Americans. So when the debate over free markets vs. regulations steers into the murky waters of finance and Wall Street in general, most of us novices are left rather confused. For one thing, finance is extremely complicated, and at times the nature of what is being sold and traded on Wall Street seems purposefully obfuscating. The basic premise of supply and demand is wildly distorted. That’s also why it’s been so difficult to separate the wheat from the chaff in the whole economic crisis debate and in the proposed stimulus and bailouts as well. Discerning the fault, the remedy, and so forth is not so easy – especially when so many smart people disagree.
So my question is how best to regulate banks and Wall Street without stifling global competitiveness? How do we put up walls and levies to protect ourselves against systemic risk without unduly burdening our banking system? Informed opinions and savvy arguments are most welcome. Contributors to the site (Dave!) should chime in as well.