I started reading David Brooks’ column regularly because of Earlofhuntingdon’s commentary. I found that Brooks writes scary stuff. Earlofhuntingdon wrote a post today (http://oxdown.shadowproof.wpengine.com/diary/4320) on the latest David Brooks column. The column is so egregious that I figured Earl could use a little backup. I will focus on the Brooks bizarre contention that global financial reform is some kind of distraction from dealing with the current crisis.

The problem with Brooks’ contention is that the most complex, dangerous and difficult to solve part of the crisis, occurred precisely because the global financial system is broken. As long as it is broken, it will breakdown as quickly as we pour billions upon billions of taxpayer dollars into it. And therefore, the kinds of problems that Brooks can focus his lofty mind upon, like European rabble rioting in the streets, will continue.

First, let’s get the fun out of the way. Phil Gram has flipped and now supports regulatory reform. I do not think that Gram’s opinion is worth much on it own, but it shows how quickly events move beyond the horizon of flacks and hacks who do no homework. Far more competent and accomplished conservative economists than Gram have recommended that financial regulatory reform is the safe and sane, ‘conservative’ way to go, the first thing to do in order to solve the crisis. An example is Willem Buiter, who recommends that if we move quickly on financial reform, that may restore the credit markets quickly enough to forgo very large and repeated fiscal spending stimulus, or experimental monetary policy (which, as of a few days ago we have committed ourselves to). I am far more liberal than Buiter, but I do think that his approach is (or perhaps, sadly, was) worth a try, since it would have made fiscal room for needed long term reforms in health care, energy policy, etc.

Felix Salmon reveals that Phil Gram is a Radical Commie Revolutionist
Phil Gramm’s U-Turn
Jan 24 2009 8:21PM EST

Brooks says that work on strengthening the IMF is sensible, but that work on strengthening international financial regulation is foolish. But, what is one of the IMF’s main priorities right now?

IMF Key Issues
Reforming the International Financial System

Below is a background article from last Fall
More Calls for Global Financial Rules, Business Week

The United Nations is also behind the effort (probably a bad sign, for Brooks)

The Commission of Experts of the President of the UN General Assembly on Reforms of the International Monetary and Financial System http://www.un.org/ga/president/63/commission/financial_commission.shtml

I am tired of being an abject Stiglitz fanboy, and looked for detailed analyses by other authors, but looks like he is one of the main people on the UN Commission. Below are his statements giving details on the need for reform, and the proposals being considered.

Stiglitz’s statements on global financial reform