Indeed. One can more convincingly argue that free enterprise (productive free market businesses) have been brought down by unfree state business (the banking system which ultimately controlled by the BoE, Fed, ECB, etc).

The problem, as ever, is in getting our "narrative" heard.

actually it seems like the big banks pretty much all spotted madoff.

Agreed.

The government does have a role in making sure that there are no cartels, collusion, market rigging etc, but nine out of ten 'bubbles' are purely down to government intereference in free markets.

Seeing as 'the government' always had an indirect financial interest in banks, via the £35k deposit guarantee (now £50k) it's also right and proper that they supervise banks (as in supervise, not regulate) seeing as of how shareholder and management supervision has been shown to be useless (principal/agent problem).

But that's about it.

The government does have a role in making sure that there are no cartels, collusion, market rigging etc,

Let them cartelise and collude. Cartels are inherently unstable because every conspirator is constantly looking around the table with shifty eyes knowing he could gain an advantage by outcompeting other members of the cartel; cartels always benefit the least able conspirators, so there is always a pressure for the more able to break ranks.

The dangerous thing for us proles isn't freely formed cartels, it's government supported cartels, which can and do hold the members in lockstep. We'd do better from no government intervention at all.

botogol, if they spotted the Madoff fraud, then how come such big banks as Credit Suisse, UBS, Santander, HSBC, etc, got stung for billions from this shyster?

The truth of the matter is that even some of the world's largest financial institutions did not do basic due diligence checks on this man and were only too happy to ride on the back of his Ponzi scheme. They have now been shafted. For once, I would be supportive of clients in suing their banks for basic negligence and failure to honour their fiduciary responsibilities.

IanB, correct. A good example of how the supposed power of cartels is overblown is OPEC. Four months ago, the price of crude oil was heading towards $150 a barrel. It is now less than $40. That is an incredible shift. OPEC has been hardly able to have any influence on the price movement. Most cartels are unstable because there will always be a vested interest in going against it. A lot of anti-trust laws are pointless and in fact have been used to shake down or damage businessmen deemed too big for their boots, like Bill Gates, Rockefeller, etc.

Regulation under the UK's FSMA 2000 has been operating as nationalisation lite, or state control by proxy. The Government's shock troops in this assualt on free markets, the Financial Services Authority are, I can categorically state as I work in FS, clueless. Everything they do is a bureaucratic measure that loads costs onto all the market participants and, as has been shown by the their total failure to identify problems at Northern Rock, a complete waste of time.

We have tried over-regulation and it has failed. Now let's get back to free markets and freedom and watch them succeed.

It's about to get a whole shedload worse.

We may all (I do) burble on about the functions of governments. Still we are avoiding a more pervasive context of social organization and the trends amongst "Western" peoples since the two "Enlightenments;" the Scots and the French (or continental).

The French Enlightenment, and its immediate precedents, particularly in Natural Sciences, brought forth the determination that rules (sometimes called "Laws") must exist, or can be deduced to be constructed [I prefer fabricated] as Hayek noted, for all of human conduct. Hayek referred to "constructivists." To me such persons are "fabricators" (in all meanings of that word). As noted by some of the more perceptive Scots (and others since), all this has involved enormous conceit as to the application and force of "Reason" to determine the relations of humans with one another and their surroundings (I would use "environments" but for the possible misinterpretation).

The French present us with extreme examples of creating a new "law" whenever economic or social problems arise; legislation as the cure for all ills.
But, they are not alone in the proliferation of "laws." The statutes of the U.S., the U.K. and other nations where I have worked in the past 55 years have increased exponentially - on all matters civil and criminal (especailly the latter).

The resultant impact on commercial and financial activities (a significant part of human activities in advanced cultures) is not unique or separate, but rather an integral part of the extension of the concept of rules for everything - even if they have to be fabricated rather than evolve from circumstances; and fabricated they are with conceit, errors and consequences.

The swampy morass of fabricated rules has created an environment for predatory creatures and their activities that would not otherwise subsist. The existence of fabricated rules offer no assurance that they will either control or effect human actions as designed or proposed. And yet, the floods of "legislation" "regulations," "ordinances," etc. go on and on - but there is not, in most of the "West," sufficient force to contravene the the conceits generated by the "French" Enlightenment. As yet not enough people realize they are, or find themselves, so obviously adversly impacted to raise that vital question - why?

As a result we now live with a "law" of rules rather than the rule of Law.

The government does have a role in making sure that there are no cartels, collusion, market rigging

The existence of central banks guarantees the existence of banking cartels. When the Federal Reserve was set up in the US, it didn't have to be forced on the bankers. They were all for it. They wanted it to cartelize high finance.

Not forgetting the costs those regulations create, making it more difficult or impossible for new entrants thereby creating the too big to fail problems.

As for regulations in financial markets, at my very low level, I had to take tests about subjects with absolutely no relevance whatsoever to what I do. The only saving grace was that they were online so I could do them at work. They were such a waste of my time that I would be at a loss to tell you what most of them were about. But somewhere in my firm, a jobsworth was able to tick a box so that another jobsworth at some government agency could tick another box.

That the real cancer.

Johnathan -

I understand your point, although when the Blmbg writer is talking about globalized crisis I think he's referring to not just the interlinkage of credit markets (which have been linked for quite a long time) but to the globalized linkage of design, raw materials, and finished materials supply and manufacturing operations which are now intertwined in a way they were not in the past. Money has been intertwined for some time, but a country's manufacturing base used to be housed within its own borders (and when I talk borders I'm including imperial borders). We've sent much of our manufacturing base to China and Mexico, and that is very different from the 30's.

I thought the myth of unregulated global capitalism was the idea that it has ever existed - I guess I have some catching up to do :)

... markets were in fact more globalised 100 years ago than they are now.

In labour they certainly were. Migration was physically difficult and expensive, but it was broadly permitted.