By Arnold Kling
Regulators apparently succumbed to the idea, peddled by financiers and modern theorists, that if a little financial innovation was good, a lot must be great–even if it was far outside their capacity to monitor.
Thanks to Reihan Salam for the pointer.
Also, James Kwak explains why Europe is in worse shape than we are. It’s been years since I read Steve Roach describe the United States as the “tallest pygmy” in world currency markets, and it’s a metaphor that just seems to always apply.