A Path for Financial Regulation Suggested by the Euro Zone Crisis

This paper argues that the global financial crisis still in train is a system-wide financial crisis on par with the Great Depression and the bursting of Japan's bubble, and that there are lessons to be learned from previous system-wide financial crises. The primary argument is that because a system-wide financial crisis does not start with a financial institution and proceed in a falling dominoes-like fashion, but rather is akin to the table upon which the dominoes sit being shaken, neither the levying of a surcharge on designated SIFIs nor a framework for orderly resolution are going to be effective. What can be effective instead is to inject public funds to rescue financial institutions and/or their creditors