Hyman Minsky and the credit crisis: How much do regulators know about today's finance?

The credit markets experienced their very own 'Minsky moment' last summer, when great swathes of financial instruments imploded under the weight of their own debt. But should regulators have predicted this crisis and done something to prevent it? By Anastasia Nesvetailova

As the subprime crisis has cascaded through the world markets, the name of Hyman Minsky has been plucked from the relative obscurity of the economic history books into mainstream financial commentary. Observers - whether on leftist blogs or on the pages of the Financial Times - argue that we are in the midst of a 'Minskyan' financial crisis.

But what precisely does a 'Minskyan' reading of finance suggest about the current state of financial regulation? There are two Minskyan economic theories