As if collapsing prices were not enough,
American mortgage firms now have to cope with home
rage. Borrowers vent their fury on the system that
is repossessing their properties by smashing holes
in walls and tipping paint over living-room carpets.
Something similar is going on in the house finance
built. Faith in open markets has been poisoned by
a crisis that has spread from one asset to the next.
First there was disbelief and denial. Then fear. Now
For three decades, public policy has been
dominated by the power of markets – flexible and
resilient, harnessing self-interest for the public good,
and better than any planner-in-chief. Nowhere are
markets deeper and more liquid than in modern
finance. But finance has stumbled and there are
growing calls from all sides for bold re-regulation.
New rules become inevitable the moment the
Federal Reserve rescued Bear Stearns and pledged
to lend to other Wall Street banks. If taxpayers are
required to bail out investment banks, the governments
need to impose tighter limits on the risks those banks
Source: The Economist (Adapted)
Apr 3rd 2008