Financial Regulation

http://www.nytimes.com/2009/12/14/opinion/14krugman.html?emc=eta1

There's an old saying from a Bob Dylan song that "Denial is not just a river in Egypt!" Krugman's post in today's NY Times (attached) refers to the subject of "denial" as it relates to financial regulation. Nothing could get me to yawn quicker than a discussion of financial regulation but the potential disaster we face if it is not properly handled can effect everyone.

It was probably logical that the more years that passed by after the Great Depression, the more pressure would mount to "deregulate" again. After all, for 40 years everything was OK. So, as Krugman points out, we deregulated with Ronald Reagan and got the savings-and-loan crisis of the 80s. That didn't seem to phase us so we went on to scrap one of the great pieces of Depression Era legislation in 1999 (Glass Steigel) so that (literally) Citicorp could merge with Travelers creating the great monstrosity: Citigroup.

And, of course, in this decade, we had Alan Greenspan admitting that he was wrong about the ability of the financial markets to police themselves (in addition to having no idea, as it was happening no less, that the sub-prime lending situation was as extensive as it was!).

With all of this as background: "...last Friday in the House of Representatives...with the meltdown caused by a runaway financial system still fresh in our minds, and the mass unemployment that meltdown caused still very much in evidence...every single Republican and 27 Democrats voted against a quite modest effort to rein in Wall Street excesses."

So, as Krugman points out, it will be up to the Democrats in the Senate to get behind financial reform. If they don't learn from the lessens of history, then we will all be condemned to repeat them. It is an old saying but one that continues to be true. As George McGovern said in the Washington Post over the weekend, Afghanistan is looking a lot like Viet Nam.