As the World Reels

Our Sept. 29 cover story on the devastating worldwide financial crisis alarmed readers. While one cautioned we haven't yet learned of "all the corruption, malfeasance, fraud and stupidity" that brought this about, others decried the bailout possibility of "perpetrators making millions from taxpayers."

Rescuing Crumbling Economies
In "Big Government to the Rescue," (Sept. 29) Fareed Zakaria erroneously claims that this crisis "should put an end to false debates about government versus markets. Governments create markets, and markets can exist only with regulation." The market is created by human instincts, not by the government (and democracy was born in the market, not from any great philosophies or ideals). Neither the market nor government is perfect, but the difference is that the former punishes incompetence and the latter subsidizes it. Whom would you rather have running things, those who punish incompetence or those who subsidize it? Zakaria further claims that with Treasury Secretary Henry Paulson, "America is extremely fortunate to have a man of tremendous intelligence, drive and pragmatism." No one would have disagreed with Paulson when he denounced "irresponsible practices" under which mortgages were sold to unqualified buyers and "sliced and diced" all over the world. According to him, "What has gone on here is terrible, inexcusable." Where was he when this behavior was rampant on Wall Street? Until May 2006 he was running a leading investment bank that was doing quite a bit of slicing and dicing, as John Gapper of the Financial Times has suggested. Now, as Treasury secretary, Paulson declares he's shocked about these "irresponsible practices." His ethical position appears questionable. If Paulson were bold and conscientious enough to donate the $18.7 million bonus he received from Goldman Sachs for half of 2006 to the Treasury's fund and lower the taxpayers' bill, his $700 billion bailout plan would seem more palatable to taxpayers and avoid the impression that it privatizes gains and socializes losses.

Yeomin Yoon
Professor of Finance and International Business
Seton Hall University
South Orange, New Jersey

Robert McGee
Director, Center for Accounting, Auditing, and
Tax Studies, Florida International University
Miami, Florida

When Fareed Zakaria cited Haiti to illustrate where financial markets are "truly free of regulation," he picked the wrong example to make an otherwise good point about financial market regulations. As a matter of fact, since the mid-'90s, we in Haiti realized that "good regulations allow markets to work well" by setting up a package of norms and rules inspired by the Basel Committee on Banking Supervision. These are constantly updated and strictly enforced by an independent surveillance body based at the Banque de la République d'Haiti, the country's central bank. Readers can check Haiti's bank profiles and record in any country report from the International Monetary Fund or by visiting our Web site at www.brh.net. I hope Mr. Zakaria will honestly yield to the fact that Haiti has indeed a good and strong banking and financial regulation.

Charles Castel
Governor, Banque de la République d'Haiti
Port-Au-Prince, Haiti