Governments in control of capital Markets
The fact that government regulators are gaining firmer control of capital markets is true not only in the U.S., but in fact that reality is de pase in most other developed markets around the world. Much of the regulatory and government controls being implemented are partly the product of the re-tooling of the global financial archticture agreed upon by world leaders at the London G-20 Summit. It may take regulators and legislators several years to fully implement in their respective nations. But I think the reality of the new regulatory regime in global capital markets is sinking over at the Wall Street Journal (WSJ) — the status-quo standard bearer of the U.S. financial industry. Even the bank oligarchs and hedge fund managers — some of whom continue to resist the changes — are beginning to capitulate. That’s why I found this article in today’s WSJ by Mark Gongloff of particular interest.
For all of the excitement about improving financial markets, most are still on some form of government life support and the evidence so far is they can’t yet function normally on their own.Last fall, markets froze and interest rates soared as investors dumped stocks and corporate bonds and banks cut back on lending to their customers and to each other. In response, the Federal Reserve sharply cut interest rates and established a Scrabble game’s worth of acronymic lending and insurance programs to reassure investors and jump-start markets.
Those programs have helped return markets to near normal. Lending has resumed, and many key rates are back to where they were before the peak of the crisis. But in cases where the government has pulled back its support, markets have trembled. Given that history, officials will likely err on the side of intervening too much and for too long.
Change We Need
Those programs have helped return markets to near normal. Lending has resumed, and many key rates are back to where they were before the peak of the crisis. But in cases where the government has pulled back its support, markets have trembled. Given that history, officials will likely err on the side of intervening too much and for too long.
Read more here.