Gordon Brown

A new plan…

Regulation

Yesterday, Gordon Brown, the British Prime Minister and former Chancellor of the Exchequer (equivalent to the US Secretary of the Treasury) said. "You can't deal with the problems of global financial markets within national systems of regulation."

He’s right. As I’ve said previously, the world’s finances are too interwoven for institutions to be regulated purely on a national basis. We need better oversight, and it needs to be coordinated internationally. While the concept will likely raise the hackles of nationalists, it’s past time to such a plan.

Inadequacies

Part of what lead up to the current economic situation is that oversight of financial institutions has been reduced over time. This is particularly true in the US, but has also occurred elsewhere. It’s new painfully obvious that a pure market-driven system doesn't work.

Let me clarify that. As has been seen, the “invisible hand” does work. However, the major market corrections that have recently taken place in many sectors aren’t palatable to most. Thus, we need a beefing up of regulation, and a workable system of international coordination.