Better financial regulation.

(From Business and Finance)

There could easily be a tendency among Irish people in their late 30s and younger to look at the current downturn with reactions ranging from confusion to panic. After all, anybody who has lived with 15 years of growth that at times approached double digits will inevitably look at an economy that is just about treading water if not slightly contracting with a deep sense of foreboding.

A credit crunch is an event that happens only once every hundred years or so. But to say that it was impossible to predict is taking a head-in-the-sand approach. Over the past five years, the Bank of International Settlements (BIS) has been warning that bankers and financial institutions were developing too much of an appetite for risk.

The credit markets became an impenetrable maze, as debt was wrapped up and sold on to an increasingly receptive market. Consequently, when the subprime crisis exploded last August, bankers didn't know who was carrying what liabilities. A year on and that is still the case. Interbank lending has dried up as banks eye each other suspiciously. Nobody is willing to stick their head above the parapet and call the bottom on this crisis.

Even though a credit crisis may only flare up every century, it has very real lessons for the immediate future. Nowhere more so than in this country. Over the past few years, property developers, investors and practically every player in the Irish economy became far too highly leveraged. For the future health of the financial system, that cannot happen again.

Sean Quinn held up to 15% of Anglo Irish Bank in contracts for difference (CFDs). These are very high-risk instruments that can cause huge turbulence for any company's share price when markets become volatile. Should the regulator have allowed one investor to hold 15% of one ...