Roubini Says Financial System Risks More ‘Disastrous’ Bubbles (Self Regulation = No Regulation)

[RedEarth]

Jan. 29 (Bloomberg) -- The world economy faces the threat of more “disastrous” asset bubbles unless financial regulators overhaul rules which allow banks to police their own behavior, New York University Professor Nouriel Roubini said.

“We relied on self regulation when there is no regulation or market discipline that does not occur when there is irrational exuberance,” Roubini told Bloomberg Television in an interview in Davos, Switzerland today. “We have to change the entire system, otherwise we’re going to have another one of these massive asset and credit and leverage bubbles, and it’s going to be disastrous.”

Roubini reiterated his prediction that U.S. financial losses will more than triple to $3.6 trillion and said that most banks there are insolvent and should be nationalized. The International Monetary Fund said yesterday that the global economy will slow close to a halt this year, dragged down by more than $2 trillion of bad assets in the U.S.

The international bank regulatory framework must be completely overhauled if we are to avoid a “near depression,” Roubini said. He also took aim at U.K. Prime Minister Gordon Brown’s policy for regulating the financial markets.

Regulation ‘Failing’

“Light touch that means no touch, principles rather than rules -- the entire pillars of Basel II have been failing even before they’ve been implemented,” Roubini said. “You have to rethink this global accord about capital adequacy and supervision in a different way, you need cooperation but you also need to be willing to do the right thing.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=adMHNGk5BlLo&refer=home

[global1]

1. Who Will Do This And How Long Will It Take And Can We Trust Them?......nt

[RedEarth]

2. Who do you think we can trust?

[global1]

3. Don't Know - That's Why I Asked The Question.......nt