The Boston Globe ran an editorial today, “Not Too Big to Flail,” pointing to the UBS employee fraud as reason to leave all the Dodd-Frank provisions in place, a position I favor but believe to be insufficient to the real task in consumer and banking regulation.
With few exceptions, the financial regulators already in place when the financial system exhibited symptoms of weakness, failed either to read the signs or to respond to them before it was too late.
Dodd-Frank can stay wholly in place to nearly no constructive effect if the regulations implementing its provisions are not reasonably well-enforced. Not every regulation must be enforced to its extreme and not all can be enforced given the volume of issues but a diligent regulatory authority committed to avoiding any future problems of the kind we’ve had will be essential to keep Dodd-Frank from being dead whatever its official status.
For the record, this does not mean that people from the financial industry and economists should be excluded as biased, they are essential. Without them our regulators are amateurs likely to have only a superficial grasp of the consequences of their decisions – and they too suffer from biases as we all do. Understanding the present and near past as well as anticipating the near and long term future are difficult in the extreme and will still include mistakes. We need our best efforts to do them.
“It’s also important to keep in mind that the president—and politicians generally—have limited control over economic growth. Though Obama and other contenders tout job numbers or GDP growth during their time in office, ultimately those indicators reflect more about the normal ups and downs of the business cycle than any one politician’s economic prowess.”
I’ve been waiting for some media source to say something like this for years. It is one of the most understandable of things that the public, politicians (at least those of the party out of office) and presidents seem determined to deny.
The president doesn’t have enough influence over the economy to make it obey his will. All the forces of the government, including the Federal Reserve cannot make it do what they might want it to do (even if there were agreement among all parties to the conversation about what is desirable).
Whether we like it or not, we live in an international economy which is “free market,” because all the other players, whatever their internal economic systems, are free to respond in what they see as their own best interests, to whatever we do.
Politicians would have you think otherwise; when there is good economic news the party in power is quick to take credit for it; when there is bad news, the opposition party is quick to point it out. There is not enough truth in most of these assertions to take them very seriously but many among us do.
This kind of talk deserves not just a grain of salt but with a block of salt, no matter which side is talking.
I haven’t posted much lately and almost nothing from other blogs but this seems worth thinking about solemnly at a solemn time:
“It is one of the maladies of our age to profess a frenzied allegiance to truth in unimportant matters, to refuse consistently to face her when greater issues are at stake.”– Janos Arany -March 2, 1817—October 22, 1882).
I had never heard of this man but this quotation nails it for our present time, reminds us that this is not the first time this has happened and raises the suspicion in me that it may always be true.
Bio information at http://en.wikipedia.org/wiki/J%C3%A1nos_Arany