9/09/2007

09-09-07 - 2

Throughout our recent history, every single time there's been a major liberalization of business regulation, there has quickly followed a huge scandal where the criminals rush in to rip off the consumer and markets in exactly the way that regulation was designed to protect. Back in the 80's, the S&L regulations were liberalized, allowing S&L's to invest a larger percent of their assets and to invest in a wider class of vehicles, and we got the S&L scandal. Just before the dot-com scandal (and let us stop talking about the dot com scandal as if it was a natural economic cycle of boom and bust; that's a myth which is drilled into people by the free-marketeers) the banking/investment industry was liberalized, allowing the investment banks, analysts and brokerages to merge as they weren't previsiously allowed; the result was a massive pump-and-dump scandal where the banks created a huge artificial bubble and collected billions and billions in fees for themselves. The energy trading markets were liberalized, and of course we got Enron. Recently the mortgage/lending laws were liberalized, and we see what we get.

It's no surprise that the politicans continue to cry for "less regulation" - they are paid to do so, and rewarded handsomely with industry jobs when they retire. What is sad is how many regular people believe that "competition" will somehow keep companies honest and working in their interest.

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old rants