FT.com / UK - Watchdogs need not bark together.

Joe Stiglitz in the FT says:

Countries that proceed [to protect their own citizens with strong domestic regulation] will face threats of the kind already received - a rapid departure offshore. But the parts of the financial system critical to the real economy - those, for example, that lend to businesses - are not so footloose. Any cost-benefit analysis of the loss of the gambling casinos offshore would surely conclude that if some other government wants to risk economic instability and big bills for bail-outs to its taxpayers, so be it - our task is simply to prevent contagion from these under-regulated jurisdictions. No country can fully insulate itself, but the best protection is a good regulatory structure at home. The continuing instability in global financial markets should have made it clear that we need that now.

As usual, he's right.