Thatz Why We Need Strong Regulations

Okay, so why are Indian companies in trouble in spite of Palaniappan Chidambaram’s ironclad assurances that Indian markets are so well-regulated that we are insulated from the crisis?

It is because our financial sector is so well-regulated that we do not have a decent corporate bond market.  So, Indian companies that wish to borrow end up borrowing in foreign currency from global markets. In other words, we have regulated our financial markets so well that we are more tightly coupled with the evil deregulated financial markets than we should have been.

The solution, of course, is more regulation. It always is.