Monday 17 November 2008

Kling nails it

This article explains how all those risky debts weren't supposed to be so risky after all. But the killer point is this:

The inconsistency in regulation is what accounts for the rise in the credit default swap market.

I think if you are going to regulate, you have to be really careful to trace through all of the consequences of regulation. If you see a financial innovation taking off like crazy, there is a good chance that it is being used to exploit a regulatory anomaly.


Excellent stuff, and more reason to consider that more regulation isn't always the answer.

1 comment:

AloneMan said...

Love the London Underground post...no comment link there so saying so here.
iTunes next stop