If Your Regulation Can’t Handle Greed, UR DOIN IT WRONG

American Left: SEE? SEE? Free market ideology is bad, because it steps in when there are disasters, unlike us. Now that it’s a disaster, let’s regulate like Europe, because they don’t have these problems.

European Left: Oh noes! We have these problems.

American Left: …

American Right: Isn’t Sarah Palin cute? Obama is a terrorist!

European Left: I mean, uh, greedy immoral American capitalists tricked us! We would have been fine if it weren’t for all the greed. Really, we were just buying mortgage-backed securities out of a sense of social obligation to our mistresses who need jewelry struggling victims of disaster capitalism. You should totally regulate like us.

American Left: Of course! If we just regulate like Europe there will be no greedy people left and everything will be fine! Finally, the tyrrany of markets is over!

American Right: No gay marriage!

3 thoughts on “If Your Regulation Can’t Handle Greed, UR DOIN IT WRONG

  1. I know it’s cool to hate on Europe as some kind of 1984 statist nightmare, but because Europe lacks a federal government, their financial regulations are actually more spotty and less consistently enforced than are those in the U.S. In this case, “more regulation” does not equal “more like Europe”.

    Individual EU member states have their own regulations, but there’s no regulatory framework to manage institutions big enough to cross borders — a dire omission considering how large financial services companies have grown in the modern era.

    Theoretically the EU can coordinate member states’ responses to a crisis, but in real life they’re constrained by the need to operate by consensus, which makes it nearly impossible to get anything done in an expeditious manner.

    That leads to states taking actions on their own which may help their own interests at the expense of other EU members — like Ireland, whose move to implement generous deposit guarantees to ensure confidence in Irish banks has ended up deepening the crisis in Britain as depositors transfer their cash to ‘safer’ Irish banks.


  2. The lack of EU-level regulations (for some aspects of finance, not others) has made it tougher for Europe to display a coordinated show of French “European” values in responding to the crisis, but it has nothing to do with how they got there in the first place. Europe has modeled itself the home of moral capitalism, and Euroenvy in this country has agreed.

    I don’t think anybody is arguing that “massive deregulation” has been a characteristic of European financial policy, especially on the continent, in the last decade. Yet they are under the same crisis, which suggests it might be something we have in common, such as a very easy money policy that made borrowing more attractive than investing in the wake of the tech bubble and 9/11.


  3. I don’t think anybody is arguing that “massive deregulation” has been a characteristic of European financial policy, especially on the continent, in the last decade.

    Not de jure deregulation a la the US, but de facto deregulation due to the growth of the regulated companies beyond the ability of the regulatory infrastructure to deal with them. The European economy is massively more integrated today than it was when Maastricht passed in 1993, but the regulatory clock effectively stopped then.


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