Watching some financial stocks just get wiped out in recent months, I often hear a voice in the back of my head, and it is the same voice as one of those dealers in Las Vegas who coolly tells you as he sweeps up your chips after you’ve busted in blackjack: “Thank you for playing, ladies and gentlemen.”
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Now is the time for coolly sorting out what markets can do best and what governments need to do better.
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But we also need to understand the uniqueness of this bubble in order to identify where smart government needs to step in.
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In the long run, though, regulators need to find ways to limit the amount of leverage investment banks or insurance companies can take on at any one time, because given how intertwined they all are in today’s global economy, one bank blowing up can now take down many.
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“We do not need a regulatory ‘surge’ on Wall Street,” he added. “We need a complete rethinking of how we make global financial markets more transparent and how we ensure that the risks within those markets — .many of which are new and many of which are not well understood even by the experts — are managed and monitored properly.”
In sum, government’s job is to police that fine line between the necessary risk-taking that drives an innovation economy and crazy gambling with other people’s savings in ways that threaten us all. We need to make sure that what happens in Vegas stays in Vegas — and doesn’t come to Main Street. We need to get back to investing in our future and not just betting on it.
