Tuesday, April 27, 2010

mistaking the symptom for the disease

It's sinfully enjoyable to point and scorn SEC inhabitants touching themselves rather than watching the markets implode:
Just when it was beginning to repair its reputation with its high-profile case against Goldman Sachs, the Securities and Exchange Commission (SEC) suffers another major blow: Senior staffers there were surfing Internet pornography – as much as eight hours per day, in one case – when they were supposed to be policing the financial industry.

Perhaps this helps explain why the SEC didn't see the financial collapse coming. Or did nothing to stop Lehman Bros.’ questionable accounting tactics. Or Bernie Madoff’s dubious “investing” strategy."

They were busy with other things.
But it's all too easy to look for a scapegoat. Of course, it's a perfectly plausible narrative that incompetence and errant sexual desire are responsible for the lack of financial oversight -- but if you believe that, you probably also believe that Lynndie England is the ringleader of a massive criminal conspiracy.

This is "a few bad apples" all over again. SEC workers sleeping (or worse) on the job is not the problem is a symptom of the problem. The larger issue is thirty years of market deregulation, the Washington Consensus coming home from overseas to bite us on the ass, and Democratic Secretaries of the Treasury recommending the repeal of Glass-Steagall.

If you're the SEC, for three decades you've been told you're not the solution, you're the problem. So you're not going to intervene with the almighty market -- you're going to watch porn.

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