Gee Guess We Should Have Regulated

Alan Greenspan did something that few politicians and lately corporate CEOs have failed to do. He admitted he was wrong. That there should have been some regulation and oversight on the markets. Read more here from the Post.

I think this is a very telling part of his testimony:

"I made a mistake," Greenspan said, "in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."

I think it is always a mistake to have an industry regulate itself.

That is not to say that government has to micromanage every move an industry or a company makes. It would destroy the ability of any industry or company to operate. But sometimes, as is human nature, people and institutions and industries get greedy. And that greed can feed on itself and then common sense goes out the window. This is when you need the government to step in and say no you can't do this. You can't create these arcane mortgage derivatives that almost no one understands.

Now, if the government had been less asleep at the switch, would we in better shape now than we are. That's a question that cannot be answered. But I think you can say maybe the alarm bells would have been sounded earlier and action could have been taken to cushion the blow at least somewhat. Now it seems that the whole world is heading for a recession.

Here's a sobering perspective on October 29, 2007 the Dow was at 13,595.10. Today the Dow closed at 8,378.95.