European Crisis: They Need Implementation, Not Just Talk

I'm just back from a talk, "Perspectives on the European debt crisis", by Jean-Pierre Landau, former Deputy Governor of the Banque de France and now Adjunct Professor at Sciences Po. The talk was held by Columbia economics department and maybe some other institute.

About 20 people were there, many of them European background, most of them professors. I don't know if they enjoyed the talk, and I think the speaker was sincere, frank and willing to share, but I still find it disappointing.

Because of the speaker's background, he talked much about the regulation. Though at the beginning of the talk, he did say that he might have some bias and he tried to avoid them, because "where you sit decides what you think", that's why I think he was a sincere and frank speaker. He said we need more strict regulation, he talked a lot about the design of the regulation system and the whole financial system. Well, I should admit that because of his French accent, there was some part that I missed, but at least I can be very sure that he didn't talk about the things I want to hear: implementation and action.

Government officials and scholars have a common feature distinguishing them from business people: they always talk about theories but rarely talk about details and implementation. There are a lot of theories in the world but only a much smaller subset can be implemented well and realized. They don't talk about details because most of them never was really in the market doing real things. They don't have the experience of knowing the details about what's going on in the reality. When they talk about the design of the grand system, I can't help laughing.

The big system design has not many varieties. It's very possible for you to summarize all the different styles by spending one month reading literature and talking with people. But the details need years and tens of years to learn. It's the same as trading and doing other business: the general idea is not hard, what decides whether it can be successful is how you implement it and how well you control every detail. Just like many countries have the American style democratic system, only a few can achieve American living standard (look at Mexico, the Philippines). To open a supermarket is not hard, what is hard is to make every detail perfect and to make it a Walmart. That's also the reason that when both traders hear the same message, one may earn much more than the other by better controlling the timing of trading.

European crisis is financial, but it's an economic problem. What the central bank can write on the papers is limited. What you can do a lot is to make the implementation better. It is ridiculous to me that when you have a system and you find it not working well, you just begin to blame it and try to design another one, sometimes, or on most occasions it's the implementation making a system work or not.

Last word: the Europeans need less talk about the big, but more actions on the smalls.