FT.com – White paper examines how to burst bubbles

Via FT.com / UK / Economy & Trade – White paper examines how to burst bubbles:

Taking away the punchbowl just as the party gets going is the ambition of all finance ministers, central bankers and financial regulators. They realise that if they allow the partygoers to get riotous, mopping up the subsequent mess is an unpleasant business.

This approach lies behind the new fashion for so-called macroprudential regulation, under which the authorities would act to prevent unsustainable credit bubbles. But just as almost everyone agrees that this is a good idea, few know what tools will work, whether the players will simply move on elsewhere or if the financial lobby will prevent timely action.