Matthew Yglesias » It Depends on What The Meaning of the Word "Bank" Is
John Emerson Says: October 12th, 2008 at 11:31 am Yeah, "regulatory arbitrage" is a cute, pseudo-technical way of saying "shopping for weak regulations". It's the same as registering corporations in Delaware, registering credit card companies in South Dakota, registering corporations in the Caymans, classifying SUVs as trucks, hiding money in Switzerland, and registering ships in Liberia. So as I understand, what DeLong is saying is that much of the global financial structure since 1995 or so has been shaped by deregulation and the attempts of finance to escape regulation, and that the current collapse is at least in part the result of that.
Yeah, "regulatory arbitrage" is a cute, pseudo-technical way of saying "shopping for weak regulations". It's the same as registering corporations in Delaware, registering credit card companies in South Dakota, registering corporations in the Caymans, classifying SUVs as trucks, hiding money in Switzerland, and registering ships in Liberia.
So as I understand, what DeLong is saying is that much of the global financial structure since 1995 or so has been shaped by deregulation and the attempts of finance to escape regulation, and that the current collapse is at least in part the result of that.
Both in the taxation realm and many other parts of finance the prevailing rhetoric has not only been "if it's not against the letter of the law, do it for profit" but "changing the letter of the law is bad for business, because it creates an unstable environment for business."
We'll need to push back on these themes if effective regulation is to be reinstated.
the prevailing rhetoric has not only been "if it's not against the letter of the law, do it for profit" but "changing the letter of the law is bad for business, because it creates an unstable environment for business."
Yep, that's t the heart of it - and it's certainly not over:
German plea for pause in costly EU laws Representatives of German business have called for a moratorium on any European Union legislation that would impose higher costs on companies at a time when they are grappling with the fallout from the financial crisis. Two of Germany's largest trade bodies said Brussels should think carefully about putting additional burdens on business given the potential of the financial crisis to weaken the "real economy". "We've got to ask whether certain measures, including environmental legislation, are responsible given the economic outlook," Hanns-Eberhard Schleyer, general secretary of German Confederation of Skilled Crafts (ZDH), told the Financial Times.
Representatives of German business have called for a moratorium on any European Union legislation that would impose higher costs on companies at a time when they are grappling with the fallout from the financial crisis.
Two of Germany's largest trade bodies said Brussels should think carefully about putting additional burdens on business given the potential of the financial crisis to weaken the "real economy".
"We've got to ask whether certain measures, including environmental legislation, are responsible given the economic outlook," Hanns-Eberhard Schleyer, general secretary of German Confederation of Skilled Crafts (ZDH), told the Financial Times.
We also have to fight the notion that regulation is a cost. In the long run, we're all dead. John Maynard Keynes
