Our D.C. politics wonk, Dan Stone, normally resides over at the The Gaggle, but is making an appearance here after checking in with former economics adviser John Taylor on the state of global regulatory developments. --KP

It's still up in the air whether the worst of the financial crisis has passed. In the here and now, the undeniable--and more immediate--question is over how to strengthen the lax financial regulations that toppled the first domino.

Economists say when recovery eventually comes, the resulting growth will likely be a product of a new regulatory structure devised by the world's governments. But the world's a big place. Government leaders may generally agree on a broad global framework of investing and trade restrictions, but getting each national government to play ball in actually setting and enforcing the regulations makes for tricky business.

"A lot of the financial institutions now are global, they're multinational. If the treatments are too different in the different countries, then that can lead to [companies] trying to develop new strategies to exploit differences in the regulatory apparatus," says John Taylor, an economic adviser to both Bush Administrations who now teaches at Stanford. He devised what economists refer to as the "Taylor Rule," a principle that uses global economic indicators as signals to central banks on how to set interest rates to avoid economic extremes.

It would be pure speculation if it wasn't jarringly apparent. A decade ago, Thomas Friedman wrote about a flattening world--one in which countries with looser tax structures and low inflation, like China and Brazil, attract national-turned-multinational corporations. The U.S. too, with its low interest rates in 2003 and especially 2004 led to a housing boom that, down the line, caught the eyes of foreign investors.

There could be an easier way out of the woods. Or maybe just less difficult. Taylor thinks that strategizing how to set global regulations before actually setting them is the vital first step. "I think that as we go through and complete financial reforms in the U.S., the considerations need to be communicated and information has to be exchanged so other countries can't thwart it," he said. If it sounds like a delicate dance, it most certainly will be.