Quote:
Originally Posted by aceventura3
What this is basically saying is that the market moves/develops/reacts/grows/changes/etc. much faster than regulators can. Basically we have trillions and trillions of financial transaction, we have some of the most highly educated and creative people trying to profit in the system and we have a handful of legislators and bureaucrats in Washington trying to control it, and them actually thinking they can.
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Don't you mean to say that the markets are developing much faster than regulators
have? This is what the report is saying. Regulators aim to reign in the risk taken on by institutions (especially big ones) so that these kinds of failures don't happen in the future—they are more or less, at least, trying to minimize the impact of such failures.
I think the problem that most people have is they think that markets are efficient, when they aren't typically. We tend to overlook the impact of behavioral trends in the marketplace. Investing and borrowing is an emotional thing on all sides of the equation. Leaving the market to "fend for itself" is a dangerous thing when you remember that the market is more human than you think.
Let's not overlook this too, from the report:
[...]despite the increasingly global aspects of financial markets, the
current fragmented U.S. regulatory structure has complicated some
efforts to coordinate internationally with other regulators.
This isn't just about the U.S. and the U.S. government; this is also about global markets and how regulation is a coordinated effort.
The idea of free markets is becoming increasingly dangerous as markets in general become increasingly complex.