Can we regulate financial markets, or are we boned?

Supervision is not always required to make money

Here's a short article about the difficulty of managing out-of-control financial markets. Peter S. Goodman makes the following points:
  1. Technological advances make it harder for watchdogs to recognize risk, or to do anything when they finally do notice risk.
  2. When banking is regulated, bankers merely find a way to "bank" outside the regulations.
  3. If everyone is making money while something is getting close to exploding, nobody cares.
  4. Innovative financial products hide their true risky nature.
  5. Regulators may have been duped by "financial institutions skilled at managing the perception of risk."
  6. Investments have become so complicated that nobody really understands them.
  7. The same institutions that could not stop the last mess are going to try and stop the next mess.
  8. The regulators and the Wall Street players are all from the same group... but outsiders don't have the experience, so the same players keep playing.
    If I summed these up into a shorter set of rules, they would be:
    1. Risk is hard to notice.
    2. When there's lots of money, hurray!
    3. Complicated is hard to manage.
    4. The system that made the mess may be the only system qualified to run it.
      Rule No. 1: Make Money by Avoiding Rules, at The New York Times>>

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