On the whole, I agree todays editorial written by Paul Krugman. In the past, when discussing the issue of Wall Street banks vs. ratings agencies, I have likened the situation to an NBA team playing against a high school junior varsity basketball team (although I am bad at sports analogies).
Not all is perfect, however, and I do have a few nits to pick:
- First; the entire article focuses on the interplay between banks and ratings agencies. Not a word about how our regulatory structure made this game what it was. If you want to ignore this, fine…but do so at your own peril.
- Next; early in the article, Krugman praises the Pecora hearings as beneficial because they “ushered in New Deal banking regulation”. I figured it was pretty well known that the Pecora hearings were a complete sham. Apparently not, but let it be known: The Pecora hearings were a complete sham. Also, on net New Deal banking regulations were not good. I’ll give you deposit insurance.
- Lastly; and this is not by any means serious, but why would you need an ID to get into an non-regulated drinking party?
Good read though, just keep these things in mind.