Monday, April 5, 2010

The case for not wanting over-regulation

Lets take a brief look into a recent quote by the Big Short Michael Berry who essentially created the Credit Default Swaps that we know all so well. He was trying to figure out why everybody thought he was crazy and looked at this quote from former fed chairman:
"Mr. Greenspan should use his substantial intellect and unsurpassed knowledge of government to ascertain and explain exactly how he and other officials missed the boat. If the mistakes were properly outlined, that might both inform Congress’s efforts to improve financial regulation and help keep future Fed chairmen from making the same errors again."

The problem here is that if future fed chairmen make the same errors than it will leave a gap in arbitragers, hedgers, and the most supremely successful investors to profit in the 3 percentage figure and beyond range due to fallibility by the public and private. If regulation was seized and done properly these CDS's would not have come to fruition and we would have asked Michael who? So I personally would vote against regulation. What about you?