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Close your eyes. Relax. Take a deep breath in. Hold it. Now, let it out.
Om.
There, I just wanted to try to create a small moment of zen before I started talking about our economic mess. The one that has apparently caused my blood pressure to spike this week.
While I don't mention this much, I know a little something about the regulation of our capital markets. In my lawyer life, I spent seven years at the Securities & Exchange Commission, most of them as an enforcement attorney (no, I didn't get a cool badge or anything).
I'm no Alan Greenspan, though I've always been fond of the phrase "naked short selling." But I did learn this -- if you don't keep a close eye on people, when it comes to money, sometimes they can't help themselves. A bit simplistic, perhaps, but when people are left to their own devices, a handful are always willing to chip away at the rules, abuse loopholes and run back to the cookie jar for just one more treat, even when they know they're not supposed to. And more often than we'd like, those of us who played by the rules and tried to save a little money are the ones who pay the price.
Remember Enron? How about Ivan Boesky? (If not, read Den of Thieves).
I can tell you from personal experience that: (1) there was more than enough financial wrongdoing to keep a federal agency of just 2,000 busy 24/7 and (2) whether businessmen like it or not, a strong regulatory scheme is a good thing. But when the government says an agency can hire more people to pick up the enforcement slack, but doesn't fund the positions, the message is clear -- we don't really want you poking your regulatory noses into too much.
When the government doesn't don't enforce its own regulations, or weakens them for the special interests, investors become Little Red Riding Hood with the markets being the wolf trying to pretend he's the kindly old grandma. The regulators are the Woodsman -- and without the woodsman, I'm sure you can guess what would have happened to Little Red.
That's why whatever gets worked on in Congress to "bail out" the economy, there had better be ramped up oversight -- regulations with some real teeth. Otherwise, we'll start the cycle all over again. Cutting back on golden parachutes and middle class tax cuts are all well and good. But the Congress and the presidential candidates had better get on board with ramping up regulation AND those who enforce the regulations, or else we'll be back in this mess sooner than you can say' investor revolt.'
Julie at mothergoosemouse knows a LOT more about the housing element to the economy's problems than I do, and she was expressing her concern a year ago. Yeah, a whole year before the so called experts:
I’ve been watching the coverage, and I’ve been impressed by the bipartisan criticism of the [current bail-out] package and the events that led up to it. I’ve also listened closely to the various economists’ commentary.
I’m pissed for a multitude of reasons. Read what I wrote at The Parental is Political more than a year ago:
…large investment firms such as Goldman Sachs and UBS purchased bundles of these loans as investment securities, primarily in hedge funds. The demise of the lenders has had a ripple effect through these firms and other banks such as Chase and Citifinancial.
Well, well, well. The ripple effect has become a veritable tsunami, hasn’t it?
I mean whose bright idea was it to securitize the riskiest mortgages, anyway? These guys would try to make a security out of a third-grader's weekly allowance if they could.
Whose plan should prevail? Jill at Writes Like She Talks takes a look at a survey of 500 economists commissioned by the creator of Dilbert!
[A] survey of over 500 economists concluded that they prefer Barack Obama more than 2:1. And that information was collected before this past week’s financial crises occurred.
...Overall, 59 percent of our economists say Obama would be best for the economy long term, with 31 percent picking McCain, and 8 percent saying there would be no difference.
Some might say, so what's your solution? The SoccerMom Vote features a plan by Congresswoman Marcy Kaptor of
