from Financial Regulatory Forum:
The decision by U.S. Congress last week reverse the so-called swaps ''pushout'' rule for certain derivatives contacts will put a greater responsibility on regulators to demonstrate they have effective oversight over bank activities of the sort that played a role in the 2008 financial crisis and 'London whale' trading debacle.
By Edward Chancellor
The author is a guest columnist. The opinions expressed are his own.
What is the glue which holds an economy together? Disciples of Adam Smith would argue that self-interest serves as the organising principle. The problem with this way of thinking is that it overlooks the fact that man is not an island unto himself. He is a social animal, who must have constant dealings with other people. Besides, according to John Maynard Keynes, it is impossible to pursue our self-interest rationally, because we don’t have enough information to make probabilistic judgments about the future. Instead, we must rely on irrational animal spirits as a spur to action.
The recent stretch of dire economic data from Germany is starting to bear an unfortunate resemblance to late 2008 – when Lehman Brothers collapsed and the world tipped into the worst recession since the Great Depression.