Still, the Pope does not hesitate to rely on the Gospel. We too must be on this same side. Perhaps the only good thing about crises is that they can shatter accepted notions about how the world works. The most basic lesson probably concerns the fervent faith in the free market. The spread of laissez-faire capitalism around the world is inevitable, now that the cold war is over and the U.S. has won.
Freedom can also lead to anarchy.
Asia and Russia are good reminders that the rule of law, regulation of banks, bankruptcy courts, accounting transparency, and a whole web of legal do's and don'ts are necessary to channel high octane, short-term capital flows to efficient investments. Without government playing a major role, international capital flows can lead to corruption, overcapacity, currency devaluations, recessions, and even a backlash against capitalism itself. Capital and foreign exchange controls are returning with a vengeance in Asia and Russia. Free markets need government action to work best. This analysis is true, up to a point.