With Stearns bailout "Deregulation has reached its limits"

So says the Financial Times associate editor Martin Wolf in a brief blog post,

Remember Friday March 14 2008: it was the day the dream of global free- market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns, the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free-market capitalism, declared this era over. It showed in deeds its agreement with the remark by Joseph Ackermann, chief executive of Deutsche Bank, that “I no longer believe in the market’s self-healing power”. Deregulation has reached its limits.

I think he is correct in the sense that the current fiscal crisis has deep roots in the more laissez-faire attitude taken by U.S. politicians and policy makers (Democrat and Republican) since the rise of Ronald Reagan. Key regulations were lifted or ignored and markets were allowed to operate in a way that we haven't seen since the FDR took office. It's no coincidence that today we are on precipice of the worst financial calamity the U.S. has seen since FDR took office.

Regulations are not meant to stifle capitalism, instead they are there to save capitalism from itself. Without regulations, without enforcement markets can and will self-destruct. The key is finding the balance and the last 30 years were wholly without balance.