yep -- this is exactly what we need <s>
>>The time for bank regulators to get tough is when times are good, not when times are bad. They didn't, of course, during the bubble years, but that is not a rational justification for getting tough now. If counter-cyclical is good for Fed funds policy, then counter-cyclical is good for bank regulatory policy, too. Interestingly, famed economist Henry Kaufman applied this logic just this week5 in calling for a cut in margin requirements for stocks, after having been a fellow traveler with me and Bob Shiller in advocating a hike in margin requirements during the bubble years.
Henry surprised me on this score, even though his logic was perfectly reasonable: regulatory policy should be counter- cyclical and since margin requirements are a regulatory tool, a cut certainly wouldn't hurt to break infectious risk aversion (though unlike the case of a hike, it would be less likely to "work," for proverbial "you can lead a horse to water, but…" reasons). What Henry should have advocated, if I may be so presumptuous, is a counter-cyclical easing in the implementation of bank regulatory policies.
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let's round up the economists. Cast lots and let 2% stay in the country ... it would be a good start, IMO. <ng> |
