I do appreciate your last paragraph and agree.

But look, we need some sort of accountability in Derivative markets. Right now they are worth only what you can get someone else to pay, and if you have packaged bullshit there is virtually no chance of you being busted or held accountable. Lets get some sort of investigative body involved in at least sampling a small subset of these, or open for arbitration and enforcement of fraud. That would go a long way towards people getting some confidence in these contracts.

Lets Enforce lending standards in the subprime market, and hold brokers and originators and recipients responsible for misrepresentation.

One of the biggest problems with the MBS market is that there were conflicts of interest with the Bond Rating agencies that slapped AAA status on the paper, and lack of dilligence. Lets get some over-sight there.

The point of regulation is not socialism. Markets are roiling thermodynamic systems a stochastic as the math that models them is. Dikes and Levees keeps rivers working for us unstead of drowning us. Thats exactly what regulation does for markets.

Can regulation stop up and flood markets just as poor flood control systems? Hell yes, absolutely. But this idea that we can put everything into these semi-chaotic systems, tie our entire civilization to them, and then drown in them when they don't act rational... I don;t give a flying one what moral system you have about markets and enlightened self interest- its just damn stupid.

Can we ever completely regulate away the stochastic nature of markets? No. But can we prevent the sort of abuses that have just about wrecked our entire financial system and threaten to trash our entire fractional reserve monetary system? I think we need to at least try.

Yeti