If one copies from one source, it’s known as plagiarism and copying from multiple sources is known as research. To that extent, you would find this post, my first on this blog, a very well researched one. In fact, I have spent the last few months hopping from one economic blog to another in a vain attempt to understand the economic turmoil that we all are faced with. The financially turbulent era of “Sub prime crisis” is a challenge for market oriented economist to explain. The crisis has plagued countries around the world, leaving skeptical observers confounded by economic reversals and seasoned professional investors flat footed.
The age old debate of Free Capital Markets vs. Regulated Markets has been clinched; it seems for the time being, in favour of the latter. A broad spectrum of reforms has been recommended in the International financial system, following the remarkable collapse of Lehman Brothers and other financial giants. And when confronted with financial crisis, many leaders, if not all, hunt for villains and indict the Capital Markets instead of re-examining the policy blunders of their own making. The first blame goes to capital markets and the system that affords mobility to these markets. The witch hunting season has hit full bloom while and perpetrators of greed and mayhem roam scot-free under the cover of financial bailouts.
There exists remarkable evidence in history of all financial crises, that it is the government policies that has almost always, exacerbated the upheavals. In other words, the predisposing conditions of a crisis are local in nature; crisis comes from within and not outside, and certainly not because capital moves freely from one market to another or market determined forces. One lesson rings loud and clear, regulation or no-regulation, the world will see many more such financial crises unless governments refuse to indulge themselves in markets.
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