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FT Alphaville — Comment, analysis and other offerings from Wednesday’s FT, Opinion: Regulation should be international Kenneth Rogoff and Carmen Reinhart write: I n their expansive communiqué on the global financial crisis last weekend, the Group of 20 leaders bemoaned the pro-cylicality of financial regulation caused by lax regulators, inattentive rating agencies and greedy financial institutions. Curiously absent, however, is a candid acknow­ledgement of politicians’ central contribution to the mix. That is most unfortunate. Finding ways to insulate financial regulation from political ...

links for 2008-11-19
Economist's View — ... Hour Meme - Felix Salmon The check is in the mail - Econbrowser Clown on Wall Street (literally) - EconoSpeak Chinese Auto Industry Presses Beijing for Bailout - NYTimes.com All Hail the Apple Maggot! - Olivia Judson A Bottom-Up Bailout Rather Than Trickle-Down - Robert Reich What do we know about infrastructure spending? - macroblog Regulation should be international - Rogoff and Reinhart - FT The ...

Calling for an international regulator
FT Alphaville — ... should look for ways to make policy less cyclical. In addition to imposing stricter capital requirements than envisioned by Basel II, they should dig up other rusty tools to combat leverage, such as margin requirements and reserve requirements. Above all, say Rogoff and Reinhart, an international regulator should be sought to protect against the detrimental effects of national political interests, among them chiefly favouritism via the promotion of national champions. Related link: Regulation should be international - FT.com ______

Agency Costs, Transactions Costs, and the Wisdom of an International Superregulator
Streetwise Professor — In yesterday’s FT Carmen Reinhart and Kenneth Rogoff argue for the creation of an international financial regulator .  Their analysis essentially internationalizes the argument in favor of creating a super-regulator in the US.  Unfortunately,  I think that this conventional diagnosis and prescription is completely misguided.  An understanding of the transactions costs of regulation and politics implies that this solution will make things worse, rather than better, because it aggravates the underlying factors that caused the regulatory failure in the first place.  I know many ...