Regulation Not All Bad

The whole theory behind the need for a central bank is not one I subscribe to, but while we have one, they should be regulated to the tilt. Noone should be able to print and lend money without oversights and restraints. The power that comes with the ability to print money is too tempting and, as with any amount of power, often gets abused. The Bank Of Canada and The Fed are two examples of this. Both believe they can print and inflate their way out of the current financial woes, even though it was this same policy that put us into the mess. I shook my head with frustration the other day when I read the Bank of Canada was to begin "quantitative easing", aka printing money.

Of course, in the end, no one can ignore the natural laws of economics. Those that make wise decisions rise, and those that make poor decisions fail. Right now we're seeing the west fail in a big way, while others are unexpectedly succeeding.

In Lebanon, the central bank chief, Riad Toufic Salame, implemented some very strong regulations a few years ago on its banking system that no one else dared to do: Banks in Lebanon were barred from investing in mortgage-backed securities and they were only permitted to lend out 70% of deposits.

Now, as the LA Times reports, while most of the world is experiencing economic turmoil, billions of dollars are flooding into Lebanon as a safe-haven (who would have thought). Their banks are offering a 6% yield on just savings accounts. Where can I get myself one of those? Oh...Lebanon.

Its good to know at least one nation was wise and resisted the urge to get drunk on cheap credit.