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Ottoabasi Abasiekong: To Regulate Or Not

By on October 15, 2012

The Banking systems and the capital market the key engines of the free market economy have in various Nations that has embraced the Capitalist economy ideals proven to be powerful purveyors of the economic dimensions that they could almost be worshipped.

But with the Post 2007 recession era the Capitalist ideal came under serious scrutiny and criticisms by and socialists scholars and leaders like Vladimir Putin, Wen Jabao, and Mahmoud Ahmanidejad who believed that the excessive liberty and freedom given to the free market economy contributed to the economic downturn in the globe.

The free-market economy or the capitalist as you may call it has created an immense platform for creativity and innovation as people are given opportunities to discover ideas and solutions to peculiar challenges and systems, which turns those that boldly get the ideas initiated and executed into market gurus and economic topshots.

So Capitalism in its ideal is not really bad as some people may present it .But there is one salient concern and debate going on from Washington, London, Milan, Paris, Madrid, Abuja, Tokyo and even New Delhi which is should the system come under severe regulations or should it continue the way it is going until an irreconcilable disaster occurs.

When we look at the events preceding the last recession that hit the United States and later spread to Europe and emerging economies we could deduce how enormous the skirmishes in the market economy softly and tenderly threw the World’s leading economy in disarray.

The Wall Street and the Banking system came under the spotlight as Lehman Brothers, American Insurance Group, Fannie Mae and Freddie Mac all had redlight signifying ‘Danger for the Economy’. This prompted about $800billlion bailout from the United States Government something the Obama Administration would have loved to avoid.

Beyond the bailout President Obama speaking at a ceremony to mark one year of the post recession era in 2009 promised Americans that the Government will do everything possible to ensure on a non-repeat of the recession disaster. Since then hi administration has had a tough time convincing the congress to support the push for more regulation of the Wall street operations.
It can be recalled that it was the poor regulations of the operations of the wall street that gave a man like Marlon Madoff former Director General of the New York Stock Exchange the leverage to turn his trading speculation platform for investors into a ponzi scheme ripping customers of a whooping $46billion.

What about the 2012 Scandal of about $2.6billion loss for J.P. Morgan Chasse Bank under the leadership of Mr Jamie Dimon? It was a misfortune to the economy, but President Obama still backed embattled Dimon to get things back on track.

It was therefore surprising when Mr Jack Welch former General Electric CEO in an interview on the vivacious Piers Morgan show, felt that as a member of President Obama was not convincing in his approach to reviving the American economy and also felt that Mr Jamie Dimon mistake is just a normal one really!

Corporate Leaders like Mr Jack Welch have forgotten that it is because of the reckless and rapacious manner in which some capitalist market leaders managed the Banks, Capital market operations and Leading corporations that led to the 2007/08 downturn that also witnessed unprecedented job cuts in the Globe.

With the recent Libor scandal (London Inter-banking rate) that led to the resignation of Chief Executive Officer Mr Bob Diamond and Mr Marcus Agius of its derivative trading sharp practises, the credibility of the UK financial system has come into the spotlight leaving the option for tighter regulations and supervision.
Nigeria the 2009 Banking crisis was another pointer to why the free market economy ideals need to be reviewed, 5 major banks were running at a loss and it took an incisive Lamido Sanusi Central bank Leadership to intervene and salvage the economy from what would have been a total collapse.

Despite the heroic intervention by the Sanusi CBN regime thousands of bankers lost their jobs, and the Capital market in the country which has been under probe, became stifled as malpractises of some market leaders created a lot of crisis for the economy which leaves the predictions of former Central Bank Governor Prof Chukwuma Soludo of another impending ‘stock market crash’ something to consider.

Spain is going through the pain of a naivety in ensuring proper banking operations , stability and transparency as the ‘Bankia’ its Fourth largest bank was declared bankrupt needing a bailout several months ago.

We have seen the ‘Occupy Wall street’ spread from the United States of America to other capitalist economies in the world, an expression of distrust and disappointment with the market economy operations, with this in view is time to Regulate or Not.

By Ottoabasi Abasiekong
[email protected]