A friend draws my attention to a paper entitled "The Origins of the Financial Crisis" from the Initiative on Business and Public Policy from the Brookings Institution.

This is very useful.

I note that the authors acknowledge the “pro-cyclicality” of" liquidity and leverage in the financial system" and they even acknowledge that "the push to deregulate of the past thirty years has led to a lack of discrimination in policy. ...we need to improve regulation where it can make markets work bet­ter and avoid crises."

However, they do not acknowledge the role of the specific refusal by regulators to implement regulations that were supposed to be in force. Nor do the authors acknowledge the refusal of legislators to legislate when there was opportunity to do that. So the authors do not put the blame where it is due: in the lap of regulators and legislators whose fault the whole caboodle is....on the other hand, the authors are happy to blame everyone else who was, as a consequence of lack of regulation and legislation, incentivised to continue to take bigger and bigger risks....

The belief in lack of regulation was at least partly the result of the rise of a specific economic philosophy related to the rise of the Baby Boomer generation and their rejection of authority, as well as their belief that human beings are all basically good.

These are not, naturally, things to which the authors draw attention, since "The Origins of the Financial Crisis" is the usual sort of compartmentalised analysis, focusing only on finance - as if one can divorce finance from everything else.

Professor Prabhu Guptara