Crack down on banks and the socially useless bits will flee offshore - Stiglitz
"Even if we were to achieve co-ordination on the regulatory regime, Iceland should have taught governments that they cannot rely on regulators in other countries to protect their citizens and their financial markets.
. . .
Countries that proceed on this track will face threats of the kind already received – a rapid departure offshore. But the parts of the financial system critical to the real economy – those, for example, that lend to businesses – are not so footloose.
Any cost-benefit analysis of the loss of the gambling casinos offshore would surely conclude that if some other government wants to risk economic instability and big bills for bail-outs to its taxpayers, so be it – our task is simply to prevent contagion from these under-regulated jurisdictions. No country can fully insulate itself, but the best protection is a good regulatory structure at home."
Just as we have been saying.