The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don’t know and can’t prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.Excellent post. Balance at Ritholtz
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Notes to myself, possibly of interest to others.
-- Bill Northlich
Tuesday, June 21, 2011
Rule of Law and the Shadow Banking System
Famed Peruvian economist Hernando de Soto provided a great overview of this fundamental truth in April, showing that the breakdown in the rule of law is the main cause of our economic problems: