TOO MUCH, not too little

Sir, Yes, it was “the intellectual and moral failure of those who were in charge of it”, but you totally miss the failure by the bureaucrats/regulators that caused all this (“The consequence of bad economics”, editorial, March 10). You have been covering all this brilliantly so I find it incomprehensible that you seem not to understand that the problem is that the central banks and governments refused to let the market work for 15-20 years or so. Had they done so, we would not have these problems today.

For example, Alan Greenspan as Fed chairman refused to let anyone go bankrupt. Had he let Long-Term Capital Management collapse in 1998, Lehman, Bear et al would still be in business. They would have lost fortunes back then, and suffered capital impairment, and would have fired many incompetents during the flight to fear and panic from greed. Instead they kept the incompetents and the capital and set out pursuing new insanities. Mr Greenspan then printed huge amounts to ensure that no one else failed. Then he refused to let the market work again when the dotcom bubble burst. So we next had a consumption and housing bubble. Mr Greenspan and Ben Bernanke again refused to let anyone fail and the Fed still props up everyone in sight to this day. I use the US in this example, but the same applies to others such as Japan in the 1990s.

The problem has not been the market or that the bureaucrats did too little, as you seem to think. They did too much by interfering with market fundamentals. The “failure for which there is no excuse” has been the governments and central banks that have refused to let the market accomplish its fundamental task of cleaning out incompetence and failure. Had they done so, we would have had some suffering temporarily, periodically over the past two decades, but nothing like we have now and will have for the next several years.

Jim Rogers,
Singapore

FT.com / Letters - Bureaucrats and regulators interfered too much