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Originally Posted by Baraka_Guru
Don't you mean to say that the markets are developing much faster than regulators have?
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What I am saying is broader. Not only is the financial market developing much faster than regulators can manage that development, the market is too big, the participants too clever. The fundamental problem with regulators is that they are always in a position of being reactionary. Also, in complex markets regulators who no longer participate directly in the market will not be current on what is happening in the market. It is ironic that the current administration is making so much noise regarding lobbyist, people who can connect government to markets in both directions. I understand the issue of conflict of interest, but there can be a bigger risk of regulators simply not being in touch and not having a clue on what is needed to address issues.
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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.
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I think a bigger problem is the false sense of security naive market participants have thinking regulators have markets under control. The Madoff scandal was due to the fact that investors thought he was in compliance with market regulation and because of that they did not do their own homework.
-----Added 23/1/2009 at 02 : 48 : 42-----
Quote:
Originally Posted by roachboy
i don't see why american conservative-style market metaphysics are relevant any more.
look around and you see what they've done.
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It is relevant because it is dominate.