Listen to left-leaning politicians talk about financial bubbles and you get sharp scape-goating of anyone appointed by a member of the opposite political party, or denizens working on Wall Street.
Then you get their political solution. More regulation, to see to it that the regulators catch the next bubble before it starts. Nip it in the bud, so to speak.
It cannot be done, except in fantasy political circles. Bubbles are hard to recognize in advance. That’s only easy in retrospect.
Example: The residential housing bubble. Then, Congress went out of its way to actually exacerbate, not salve a future problem.
There was legislation introduced years ago to reduce Fannie Mae and Freddie Mac leverage. That would have reduced the fuel that fed the fire under the housing financial bubble. And it was turned down by politicos who did not want to squelch the boom that gave lower classes an opportunity to own homes they could hardly afford.
So all talk about regulating bubbles is merely political. It has followed each bubble we have ever had.
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