On-air: Regulate or stimulate?

What’s the way out of the recession and financial crisis? Print more money, borrow more cash, bail-out businesses and spend your way out … or overhaul the system, regulate the banks and markets more heavily, and cut out tax havens, short-selling and dodgy mortgages?

60 Responses to “On-air: Regulate or stimulate?”

  1. 1 Steve in Boston
    April 2, 2009 at 13:25

    None of the above proposals will work.The problem is that there are too many human beings who are unable or unwilling to support themselves, and the world is collapsing under their weight. I’m not just talking about welfare or food stamp recipients, but also white collar workers whose jobs consist largely of shuffling paper. We have walked into a trap, deceiving ourselves for the last 30 years through deficit spending, borrowing, and creative financing into believing that it was normal for everyone to live the good life without working too hard, for everyone to be a winner no one a loser. Under these seemingly prosperous conditions, populations have grown to unsustainable proportions.

    There are four possible outcomes:

    1. Technology will take a quantum leap forward so that we are able to cheaply feed and fuel the world.
    2. There will be a major de-populating event such as a nuclear World War III, or a pandemic that quickly spreads around the world.
    3. There will be a Russian Revolution style class warfare leading to a prolonged series of mass killings.
    4. Governments will collapse and be replaced by large and competing gangs of organized crime as we’ve already seen in much of the world. Survival of the fittest becomes the order of the day, and the civilization as we know it ceases to exist.
    History is full of examples of all four. I’m praying for #1.

  2. 2 VictorK
    April 2, 2009 at 13:29

    The alternatives you give are ‘socialism’ or ‘socialism’.

    The options of reduced government intervention in markets, and regulation confined to removing impediments to the proper functioning of markets also need to be considered, not least because they might actually stand a chance of working. In the same vein, banks that fail should be allowed to go under (they earned it). Since community comes before economics (though not in the materialist-centred thinking of some socialists) governments should intervene in bank failures only to protect savings and to write off mortgages (the latter would also increase liquidity in the economy). That kind of intervention has achievable ends, not the desperate & speculative ones associated with printing money or directing socialist venom at tax havens (as if these had anything to do with our present troubles).

  3. 3 Roy, Washington DC
    April 2, 2009 at 13:38

    Reckless spending is what got us into this in the first place. Borrowing more cash and spending large amounts of money in hopes of “stimulating” the economy is just going to sink us deeper into debt. It makes no sense.

    What we need to do is fix all of the problems that led to this in the first place. Shady mortgages, unscrupulous speculators, tax havens, irresponsible corporate behavior, and so on were made possible because of a largely unregulated market. Once rules are added that make this sort of thing difficult, and once they are actually enforced, the market will sort things out from there (this implies that mismanaged businesses should *not* be bailed out).

    The free market is a good thing, but it needs to have rules, or people will abuse it.

  4. 4 Bob in Queensland
    April 2, 2009 at 13:45

    Why should it be mutally exclusive? Stimulate to reduce the effects of recession and regulate to prevent the mismanagement that caused the crisis happening again.

  5. 5 Robert
    April 2, 2009 at 14:00

    You can’t look at this issue in so black and white terms.

    We more need regulation in certain sectors. But we need the right sort of regulation and not heavy regulation for the sake of it.

    We need stimulation and protection in parts the economy. But this shouldn’t be used as an excuse to simply hand out money to anybody. We should accept that companies will fail. The stimulation shouldn’t protect failed business models and to reward those that have made mistakes in the past.

    The answer isn’t one or the other, but the right combination of the both.

  6. 6 gary
    April 2, 2009 at 14:15

    International (and local) businesses require predictability and reasonably stable reservoirs of currency to be successful, thus both regulation and stimulus are needed. These things are not mutually exclusive!

  7. April 2, 2009 at 14:29

    stimulating the economy means that still the world is putting bandaid plaster to cover up this economic cancer that has engulfed the entire world economy rather than treating this cancer from its roots ?for that i think regulation is better option by miles?

  8. April 2, 2009 at 14:32

    I think that a combination of increased regulation and spending would be the best solution to our economic crisis. With hundreds of thousands of Americans unemployed or under-employed, we need to ensure that thir needs are met so that when the economy does revive, they will be able to participate fully in it – rather than begin their own financial recoveries at that point. They need health care, help paying the bills, food assistance, etc.

    As for those corporations whose unchecked greed got us into this mess in the first place, they should be trotted around with rings in their noses and choke-chain collars on their necks. We have to strengthen our anti-trust laws, encourage small businesses that specialise in serving local communities, and increase the transparency and accountability measures necessary for ensuring that this nonsense does not happen again.

  9. 9 Vijay
    April 2, 2009 at 14:53

    Regulate or Stimulate?

    Both,of course

  10. 10 Dan
    April 2, 2009 at 14:56

    Steve in Boston has my vote as I think he sees the issue clearly but I am not so optimistic. I think #2 is most likely.

  11. 11 Bert
    April 2, 2009 at 14:57

    I agree that we need both JUDICIOUS stimulation, very short term only, and intelligent regulation for the long term.

    However, may I suggest that perhaps the economy in the US was way too hot, and that even now, with all the talk of not enough consumer spending, people are still not saving as much as they should?

  12. 12 Ron S. from Ft Myers Florida
    April 2, 2009 at 14:59

    I have always felt that “small” should be the new “big”. Help small business upstarts, entrepeneurs first. Then housing. Not mansions, but “smart” housing that fits a normal person’s budget, reasonably sized, and helps the construction industry at the same time. Then the auto industry: Building well-built, eco-friendly vehicles en masse, like Henry Fords’ Model T in the 20th century.

  13. April 2, 2009 at 15:03

    The way out of the current recession is to regulate the banks and the markets without fettering free trade movement. Printing more money without regulating the markets will simply result in two digit inflation which will cause further economic problems and deficits. Consumption can be enhanced when people feel financially secure. Without financial security, consumers will continue to tighten their belts.

    G20 must find tangible mechanisms to put the world economy on the right track for both producers and consumers to feel confident and to keep the economic wheel rolling at reasonable speed. The current crisis has primarily been caused by unrefrained investment and consumption based on speculation which has made the economic wheel come to a relative halt after the unexpected crush.

  14. April 2, 2009 at 15:11

    Regulation represents a “long term” fix and stimulation a “short term” boost to local and global economies alike. Rather than being mutually exclusive, they are the yin and yang of a more tempered (and therefore more reliable) economic organization going forward.

    April 2, 2009 at 15:18


    rev.e.u peterson

  16. 16 Assiya
    April 2, 2009 at 15:38

    Oh, I know the answer: Islam 😉

  17. 17 Matt in Oregon
    April 2, 2009 at 15:40

    Both. Like Bob said you need to stimulate to get things going again and regulate to keep that growth ‘boom’ from causing another ‘bust’like this.

  18. 18 Luci Smith
    April 2, 2009 at 15:54

    I think that Lula represents my case best of anybody. I am born in the US, live in Denmark and do not think much of Sarkozy (a wuss) who can walk out, for all I care.
    I sympathize with Obama’s need to not anger the criminal capitalists and hedge funders in America, but babe, the games have to stop!

    The bottom line is that the environment and unemployment and health care are the ISSUES. Helping hedgefunders to keep their jobs and Hummers and SUV’s isn’t! Let them buy bicycles!

    The world ought to be using this crisis as a WAKE UP CALL, but most of those in the American congress have their heads in the sand, to put it nicely. They are refusing to see the need to change strategies about energy and cars. IT HAS TO BE DONE!

  19. 19 Sudipta
    April 2, 2009 at 15:57

    Bailouts and stimuli will only provide a short term illusion of a cure. However, in the long term and fundamental underlying problems will remain. In this time of recession, companies and banks should be allowed to collapse. Let the world’s economy suffer a huge collapse, but at least we will come out of it with a stronger economy and with our lessons learned. If we don’t do that this will happen again and again.

  20. 20 Sam Kansas city
    April 2, 2009 at 16:00

    Well the only receipe for success is middle ground or plain old blending. A 2/3 regulation and 1/3 stimulums plus a lot of hoping and prayers

  21. 21 Peter SC
    April 2, 2009 at 16:05

    Gee! Some of you are talking about apocalypse . There is no problem, really. It is all in the mind. For once listen to the Chinese. China’s PM said recently , ‘Confidence is worth more then GOLD.

  22. April 2, 2009 at 16:11

    Britain deserved more. A momentous occasion for the world.
    Lord Mendelson was the only one to point out that money was in short supply.
    The Gulf states could have chipped in a couple of trillion dollars to IMF.

  23. 23 Jennifer
    April 2, 2009 at 16:11

    Regulate and stimulate all you want but unless people have confidence in the economy, it just doesn’t matter.

  24. 24 Bertrand
    April 2, 2009 at 16:27

    The entire Trading and Financial Systems needs drastic overhauling. A new and more equitable system is needed.
    I hearing a strange utterance coming from “Intellectuals” talking about
    Global Economy” yet the G 20 meeting Rresents 90% of World Trade,and excludes 90% of Worlds Population.
    What sort of a system is this ? I also hear, let’s trade our way out of poverty but nobody s buying ?
    I have been hearing, Let’s continue to have faith in the system. The same system that is crumbling right before our eyes. Guys, it time to Overhaul.

  25. 25 Sam Kansas city
    April 2, 2009 at 16:34


    The best way to improve confidence is by actions! which would be better regulations and a little stimulating….

  26. 26 Scott - FL, USA
    April 2, 2009 at 17:19

    The irresponsible and illegal financial actions of individuals and groups of individuals is a form of terrorism against the masses. Is there any proposed action to find and prosecute those responsible for the economic destruction they have caused?

  27. 27 Vijay
    April 2, 2009 at 17:21

    I am not a happy bunny ,whose in charge?
    I paid my licence fee.come on what happened to my message
    @ 14:53

  28. 28 Tom D Ford
    April 2, 2009 at 17:25

    We have to do both, Regulate and Stimulate (Invest in our economies).

    It has turned out that the greatest threat to Western Civilization has been the Conservatism that has been creeping into our governments over the past thirty some years which has inevitably and finally brought the world economy to a stop.

    Conservatism has proved itself to be a failed ideology and now we have to Regulate and Invest our way out of the stunning failure it has brought down on our heads.

    FDR had to Regulate and Stimulate our parents and grandparents out of The Great Depression and now that Conservatism has crept back in and created our new Re-Depression, we have to Regulate and Stimulate-Invest our way out again.

    Let’s finally learn from our past and current problems and get Conservatism out of our governments permanently.

  29. 29 Jim Sheridan
    April 2, 2009 at 17:26

    The key to having a stable world economy is equal pay for equal work. As long as people are being taken advantage of in developing countries in order to creat egiant profit margins for a few people the crisis we have recently experienced will inevitably repeat. The G20 nations need to create a global minimum wage in order to correct global trade imbalances and create markets for developed countries’ products in developing nations.

  30. 30 Tori
    April 2, 2009 at 17:28

    Of course the markets are responding favorably and the financial world rejoices. They aren’t going to have to pay for the irresponsibilty and unbridled greed. Who will pay? Once again, the average person will be shaken down and expected to cover the losses incurred by the wealthy. Once again, the responsible people of the world will be expected to take responsibility for the willful behavior of the world’s spoiled, rich brats.

  31. 31 Brian
    April 2, 2009 at 17:31

    A couple trillion dollars haven’t bailed us out here in America yet, why would anyone believe a trillion would bail out the world as a whole?

  32. 32 Konstantin - Lower Saxony, Germany
    April 2, 2009 at 17:38

    It seems to me, that the entire bubble hasn’t burst yet. Pumping more funds into it only will worsen it. Let the market come to a new balance and spare the next generations the consequences of today’s faults.

  33. 33 dk
    April 2, 2009 at 17:39

    i think the uptick in the stock market indicates that the g20 plan stimulates confidence. hopefully it will it truly will stimulate the economy.
    i would love to see many of the people who are responsible for much of this economic debacle be held accountable. i don’t see many people being held accountable.

  34. April 2, 2009 at 17:56

    The problem with these “solutions” is that they don’t address the root cause of our economic woes; just their symptoms. For the last 50 years we have treated money as if it were the engine of wealth vice the representation of wealth. The central banking system of my nation, led by the US Federal Reserve, has kept the price of money artificially low in order to promote growth, but that growth wasn’t real.

    If the price of money (i.e. credit) was governed by a free market under the influences of supply and demand and fair competition, its price would be much higher than that set by the Fed, and economic growth would have been much slower over the last century, but it would have been real and it wouldn’t be susceptible to overnight evaporation or the kind of chicanery described on your show by the author of “The City.”

    We should seek to remove the power to manipulate money from the world’s governments (particularly the US government), and allow the free market to control prices.

    LT Chance Litton, USN

    from Texas

  35. 35 Anthony
    April 2, 2009 at 17:56

    @ Assiya

    No, are you kidding me? We need to go back to the Barter System!!! I’ll give ya a pizza and soda for that DVD!!!

    -Anthony, LA, CA

  36. 36 MIGUEL (from CALIFORNIA)
    April 2, 2009 at 17:59

    Grate steps are taken by the G20, I just have a question, how is the transparency is going to be improved in 3rd world countries so the money that they get does not get stolen by their governments.

  37. April 2, 2009 at 17:59

    Sorry, I meant to add that since “regulation” and stimulation only address the symptoms of our economic woes, they may power us through this recession, but the next one will just be that much worse until eventually we won’t be able to re-inflate the bubble and our whole system will come crashing down through hyper-inflation.

    LT Chance Litton, USN
    from Texas

  38. 38 John LaGrua/New York
    April 2, 2009 at 18:17

    Spending to escape the consequences of the sea of debt which imploded the world economy may produce a far worse result of a broken system and run away inflation.Revising and reviving a banking system ,encouraging industrial reform to sink the dinosaurs like GM and helping those workers in need of retraining should be the goal of governments and the private sector .Political leaders should acknowledge that the world economic landscape has changed and the folly of unrealistic consumption cannot be repeated. This crisis has its’ root in irresponsible government policies which fostered public and private excessive spending .Democratic countries cannot continue to infantalize their electorate by providing bread and circuses..A period of austerity could bring about a reevalation of the meaning of the “Good Life”

  39. 39 Harry
    April 2, 2009 at 18:22

    If the billions to be set aside for Africa are commited to to support private sector investments and joint-ventureships that would build up the manufacturing and social services industries (not extraction industry) in Africa over the next 5 years, I would been ecstatic.

    Speding that money directly via private sector would be many more time better because our governments has shown over the last 50 years that they don’t know how to create lasting economic value.

    Any money delivered to the public sector/Govts will come to nothing just as all the money that went before.

  40. 40 Harry
    April 2, 2009 at 18:24

    If the billions to be set aside for Africa are commited to support private sector investments and joint-ventureships that would build up the manufacturing and social services industries (not extraction industry) in Africa over the next 5 years, I would be ecstatic.

    Speding that money directly with that private sector would be many more times better because our governments have shown over the last 50 years that they don’t know how to create lasting economic value.

    Any money delivered to the public sector/Govts will come to nothing just as all the money that went before.

  41. April 2, 2009 at 19:59

    I agree with Konstantin and others that we shouldn’t spend good money and future credit trying to redeem business as usual especially when speculators have it gamed. Fortunately, Germany seems to be on the ball with its social contract, solar subsidies, and call for better regulation of financial transactions.

  42. 42 kpelly hezekiah
    April 2, 2009 at 20:17

    to stimulate the US/Europe’s economies is very important because they carry within them countries like Japan,China South Africa etc. They’re approach to solving this problem as the G20 has said today is, I’m afraid, TOTALLY WRONG!!!!! What Jenifer said elsewhere on this page is the way forward. If consumer confidence is not restored immediately………………… what Jenifer said is like prophecy.

  43. 43 kpelly hezekiah
    April 2, 2009 at 20:26

    regulating/overhauling(which should include prosecuting all wrongdoings in these institutions) all this so-called multi-lateral failed financial institutions like AIG is just one of the ways to restore consumer confidence in the system(economy) because people will see that they are being protected from wrongdoers even in the financial market and so would be willing to INVEST into the economy thereby taking away this responsibility from government.

  44. 44 Dennis Junior
    April 2, 2009 at 20:49

    I think that there should be both….Regulate the Financial Systems and other parts of the economy….(Not to strangle, the free-market out of it)….And, also Stimulate the economy to bring it back to life…..

    ~Dennis Junior~

  45. 45 Ralph
    April 2, 2009 at 20:57

    It seems pointless to enact any short term solution if it simply gets us out of the woods until the next crisis hits. I believe we need to take a long, hard look at free enterprise capitalism and determine how it has morphed into something quite sinister. Old ideas such as “trickle down economics” and “starve the beast” probably don’t work any more, assuming they ever did. Corporate compensation, especially in the United States, needs to be entirely revamped. American policy makers need to realize that taxes are not always evil and that regulations, properly written and enforced, may save us from complete financial meltdown. Since we can never eliminate inherent human greed, we must have tough regulations that completely prevent captains of industry from speculating with other people’s money on such a grand, destructive scale.

  46. 46 Faythe of Melbourne
    April 2, 2009 at 22:13

    The G20 was a lovely Moneyfest and showed up the reality of the Crapatilistic society from which I will now withdraw.

  47. April 2, 2009 at 22:14

    Regulate regulate & stimulate stimulate create jobs and more jobs by spending on improveing transportation, repairing bridges and everywhere to rejuvenate various industries.

  48. 48 Ron / Canada
    April 3, 2009 at 03:32

    Its all done but the screaming. We are the generation of people that don’t produce, don’t create, and don’t labour. Eventually someone has to pay for it, and the big ugly monster just came knocking at the door. Gee, I wonder what the next civilization is going to look like, Too bad we won’t be around to see it.

  49. 49 Brett
    April 3, 2009 at 05:04

    I’m with Scott and GK, we need to track down and prosecute the people responsible for this crisis. At the end of the day it has been the average citizen who ends up paying for this through loss of jobs, loss of investment returns, lower interest rates on life savings etc. Anyone for organising a world class action suit to see these criminals behind bars?

  50. 50 Freda Kiyaga , Uganda.
    April 3, 2009 at 06:11

    I agree with comments that stumulation and regulation are both necessary. Regulation should be moderate, as not to stitifle development. Goverments should be in a postion to see how tax payers money is being used. Bad practices like giving bonuses for bad performance (when a company has not made profits) should be eliminated.

  51. 51 Chedondo, Johannesburg
    April 3, 2009 at 06:40

    Let the world leaders do what is necessary to arrest the collapse, but they must move quickly to setup a regulatory framework with real teeth.

    These stimulus packages became necessary because of severe market distortions that went uncheked for a long time. Unless there is a mechanism for detecting them (the distortions) early in their lives we will be back in this loop again in a decade or so. The biggest distorton i am aware of (I am not an economist) was in the US housing market where people were fooled into paying too much for their houses. I have news for you. The same market is at it again – there was a news item on NPR a few days agao of Real Estate Agents hiring actors to make a deserted neighbourhood look vibrant and full of friendly families. All this to persuade a buyer to put pen to paper. Of course the actors vanish into thin air and the buyer finds himself in a deserted ghost town. That buyer payed too much for his house and he too will soon have his mortgage under water, to use the American term. Repeat this long enough and we have another crisis requiring another round of stimulus packages.

    Regulate, regulate and regulate. Put people behind bars if need be

  52. April 3, 2009 at 08:27

    African inventors should be bailed out so that they can remain back in africa and not be bought by G20.we are the only continent whose people are still being capitalised yet we dont do the same on the rest.
    What G20 needs to do is to put the phrase …making the world a better place than we got it…into action.
    They should not be those people who just believe in the phrase…KAZI IENDELLE(just live your life)…yet they got no hope for lives.


  53. 53 Mike
    April 3, 2009 at 09:37

    I’m confident that well conceived regulation, forcing transparency, would be very beneficial, but go easy on overall regulation.
    The huge collapse we have seen was caused by a failure to promote pure capitalism. Capitalism implies competition for goods and services among many business entities. What has been created in modern capitalistic practice is a concept that bigger is better. Bigger brings economies of scale and benefits society. AIG ?
    This has now been proven false. These companies were allowed, even encourage, to become dominant players. Society is now left to pick up the broken pieces. Go back to basics, regulate monopolies and promote competition.

  54. April 3, 2009 at 10:46


  55. April 3, 2009 at 15:13

    The root of all our problems in the world is created by greed –the need to have space, time and stuff. It is not the secondary pollution that is the biggest threat to wildlife. It is the primary production of the “thing” that usually causes the most problems for the earth and its species. I say this acknowledging that some things are way worse one produced like oil, nuclear waste and those things that when discarded create dire distress on the natural systems in which they are disposed. To truly help the environment means to understand and curb ones need to possess.

  56. 56 Jennifer
    April 3, 2009 at 16:20

    What regulations? Like the AIG situation; what is mine is mine and give me some of yours because I am entitled to it? Saying people are not entitled to the pay they rightfully earn, including benefits like bonuses, retirement, etc.? All that is doing is making people who do work less motivated to do so and those who don’t the wa-wa I want what he/she has give it mentality. As for stimulating the economy, you can’t get blood out of a turnip.

    The government can’t even be trusted to tell the truth half of the time and we take our future and place it in their hands? Not wise.

  57. 57 John LaGrua/New York
    April 3, 2009 at 22:22

    Paul Volker said it ,”Don’t try to restructure a burning house ” Energy should go to limitng the damage and then after stablizing the patient a new regeme should be designed calmly A new paradigm must be created to balance incentive with realistic rules to provide a modus operandi for the financial institutions and other industries to innovate and grow..Governments must also reform their spend ways .Hugh defeciets will ultimately bring crushing debt and ruin .Unfettered capitalism like all unguded missiles led to disaster. Solon the great Greek phi.losoher put well; 1. Moderation in all things .2. Know thy self. What better time for honest soul searching .!

  58. 58 bechemfokwen
    April 4, 2009 at 11:27

    well well, this global financial crisis as well as a host of other challenges threatening our very existence and happiness on planet earth(nuclear annihilation, species extinction,global warming,population explosion, deforestation,corruption,disease, warfare,crime etc) are all but an indication that humankind has failed woefully to handle human affairs. we probably are living in the last days of this present lawless system of things as the bible claims.stimulus or regulation, we are stil bound to face serious problems in so far as man is the architect of any blueprint designed to cure our problems. it’s about time God intervened in order to ensure a peaceful and secure earth and free us from ourselves.

  59. April 4, 2009 at 13:24

    Neither because it presupposes a brain capable of doing either correctly.

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