'...Just like natural organisms, the financial system must have death to evolve into a better form...'

Now that he's wearing some sort of do-good government hat, even Hank Paulson is not thinking straight.

Regulate in New York and finance goes to Toronto. Regulate in London, it goes to Frankfurt or Paris and since Toronto, Frankfurt and Paris are run by the same nervous bureaucrat-types, we can reckon soon enough that the entire financial markets will be hosted out of Singapore and Shanghai.

There they will accept the risks as well as the rewards, to their very considerable long-term benefit.

You simply cannot enjoy being the financial center of the world but start bleating for government bailout whenever asset prices dip a few percent. As Paulson is demonstrating, the regulatory price for being bailed out is far too high. We must all grow up and take a full measure of punishment. The banks must take theirs.