Private Regulation series
Among the many profound consequences of the tumultuous events of 2008 and 2009, not the least has been the corrosive loss of confidence in the system of regulation that supposedly protected the world’s financial system against the risk of sudden panic and collapse. Like the Fukushima disaster of 2011, the controls in place experienced repeated, multiple failures in the face of an unexpected shock. And as in the case of Fukushima, the system came perilously close to a catastrophic meltdown. The after effects of both disasters linger on as this book is written: in the case of Fukushima, a decades-long problem of clean-up and rehabilitation; in the case of the global financial crisis, a period of recession, distress in sovereign debt markets, and political instability. Looking back, we can see some of the factors that contributed to the disasters. Fukushima happened as a result of inadequate backup systems for cooling in the event of power failure. As for the financial crisis, the causes are still being debated.