Nepal – the country of the Buddha and the Mt. Everest

Peace comes from within. Do not seek it without – Buddha

Reagan-Appointed Judge: Deregulation Movement Made ‘A Fundamental Mistake’

Posted by Ram Kumar Shrestha on August 25, 2012


Apparently the financial crisis was a big enough disaster to convince even some of the firmest deregulation advocates that they were wrong.

Federal judge Richard Posner said his one-time support for deregulating the financial industry was based on a “basic misunderstanding,” in an interview with Eliot Spitzer on Current TV. His about-face is all the more noteworthy because Posner was appointed by Ronald Reagan, the president known to advocate for leaving businesses alone.

“I was an advocate of the deregulation movement and I made — along with a lot of other smart people — a fundamental mistake, which is that deregulation works fine in industries which do not pervade the economy,” he said in the appearance on Spitzer’s “Viewpoint.” “The financial industry undergirded the entire economy and if it is made riskier by deregulation and collapses in widespread bankruptcies as what happened in 2008, the entire economy freezes because it runs on credit.”

Posner’s comments come at a time when regulators are struggling to implement some of the provisions of the Dodd-Frank financial reform law, which attempts to place curbs on Wall Street. One example: After failing to put rules in place to rein in money market funds — which some critics blame in part for the financial collapse — the SEC and other regulators are scrambling to find another way to deal with them, according to The New York Times.

Posner isn’t the first to spit out the deregulation Kool-Aid that was so popular in the lead up to the financial crisis. Even ex-Federal Reserve chairman Alan Greenspan, who critics deride for believing too much in the ability of markets to right themselves, admitted in October 2008 that he was in “a state of shocked disbelief” at the disaster created by unchecked free markets, according to the NYT.

Then Bruce Bartlett, one of Reagan’s economic advisers, said last year that the notion that deregulation leads to job creation is “just nonsense. It’s just made up.”

@HP

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: