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Why constitutions matter: examining the legal root of the financial crisis.(Critical essay)

National Review

| May 04, 2009 | Epstein, Richard A. | COPYRIGHT 2009 National Review, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

THE current financial meltdown has exposed the myth that our nation's sophisticated, multilayered scheme of government regulation immunizes us from systemic failure. We are realizing that shocks, from both home and abroad, will exact their toll. What is less commonly appreciated is that the very political institutions on which we depend count as a structural cause of much of our current distress. In many cases, the root of our problems lies in the legal restrictions that block the movement of prices and wages in financial markets. It is just this sort of folly that has embroiled the Obama administration in testy disputes with bankers who are desperate to return their TARP ...

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