Guns, Drugs, and Financial Markets
Most financial market participants oppose government regulation that takes the form of direct inhibitions on transactions. But we restrict access to most drugs, impose heavy taxes and marketing constraints on tobacco, and control gun ownership for a good reason: our ability to monitor and regulate behavior is necessarily imperfect.
CAMBRIDGE – The sub-prime mortgage crisis has demonstrated once again how hard it is to tame finance, an industry that is both the lifeline of modern economies and their gravest threat. While this is not news to emerging markets, which have experienced many financial crises in the last quarter-century, a half-century of financial stability lulled advanced economies into complacency.